Are you always at a loss while planning your finances? Are you aware of the investment options available in the market?
How best can you plan your finances? What are the crieria for evaluating an investment option?
Are mutual funds profitable investment options? When and how should one buy mutual funds?
In an hour-long chat on rediff.com on Wednesday, financial planning expert Irfan Rupani replied to many such readers' queries. Here is the transcript:
Prasad asked, Where can I get indicative returns on a FMP?
irfan answers, at 2008-08-27 12:42:47hi, the indicative returns are usually mentioned by the fund house at the time of the launch
budhajit asked, hi I am planning to invest minimum Rs.3000 every month in MF, please suggest some good MF. Can i also have a Tax saving on it?
irfan answers, hi, if you are looking to save tax and have risk appetite for equities then you can consider investing in tax-saving funds (elss) like franklin tax shield and fidelity tax advantage among others.
ars asked, hi please tell me the ratoinale of investing in MF when this is also seen to be hit market movements. Moreover , thereturns are not comparable to the stocks.
irfan answers, hi, equity funds like stocks are also impacted during a downturn. but being diversified, they are better equipped in restraining volatility. also the onus of investing is on the fund manager as opposed to direct investing wherein the investor must have the requisite expertise.
Pratap asked, Iam new to this MF and dont know anything about investing, shares. So can you help me, Iam an NRI? I can invest upto Rs50K per month for the next 12 months and then stop and make profits, which MF is good and how much can i expect to make each month after investing 6 lakhs
irfan answers, hi, investments in equities must be made with a minimum 3-5 year investment tenure. also you must check with your mutual fund agent because nris based in certain countries (like the US for instance) cannot invest in certain amcs (like templeton and fidelity for instance).
gaurav asked, All my investment in the mutual funds since past 2 years are ONLY going in negative (tax savers) ... how is it that you still say Mutual finds are good?
irfan answers, hi, our view on equities is that investments must be made with a 3-5 year investment tenure. with regards to tax-saving funds there is anyway a 3-year lock-in.
ramu asked, hi, i want to know about Kotak 30 and HDFC top 200 MF ( sip of Rs 1000/- each).please advise
irfan answers, hi, we believe that hdfc top 200 is among the better managed equity funds.
ramanand asked, Hi Sir, I am investing in HDFC Equity & SBI Magnum Global Fund (both Growth Options). What tax benefits are applicable on these funds? What new funds should I add in order to build an effective portfolio with tax benefits? Thanks & Regards - RT
irfan answers, hi, neither of the funds are eligible for tax benefits under section 80c. with regards to the better managed tax saving funds, you can refer to a question we answered earlier.
jojo asked, what is passively managed Index funds and ETFs?
irfan answers, hi, on the subject of etfs, please refer to an article we wrote earlier: http://www.personalfn.com/detail.asp?date=8/16/2008&story=3
Ganesh asked, Why MFs are considered as a better option than ULIPs. I am 28, earning 10 lakhs pa. Please advise me on the insurance and retirement policy.
irfan answers, hi, mutual funds and ulips are different avenues. mutual funds are investment avenues, while ulips are an insurance+investment avenue. with regards to insurance, if you do not have a life cover then we recommend that you start off with a term plan.
gopal asked, Best MF to invest as I want to make my first investment ? With what amount it should be wise to begin?
irfan answers, hi, there is no such thing as 'best mutual fund'. select the mutual fund that is most suited to your risk profile and investment objectives. for instance, a mutual fund scheme that is right for one investor could be unsuitable for another. your investment advisor is best placed to help you with this.
Ravi asked, I had invested around Rs. 2 lakhs in four diversified mutual funds in Jan. 2008. With the subsequent downturn in stock market, the value of my investments has eroded considerably. Is there is an exit route?
irfan answers, hi, we have recently written an article on when investors should redeem a mutual fund, please click below to read the article: http://www.personalfn.com/detail.asp?date=6/21/2008&story=3
Yogendu asked, Hi Mr. Irfan, next month wanted to invest 30000 Rs. in MF. Can i go with Reliance Power (D). Wanted to invest for 3-5 years.
irfan answers, hi, reliance power is a thematic fund. if you have the risk appetite and a view on the power sector, then you can consider investing in it.
Vikram asked, Hi, Which are good FMP's running in the market which I can invest in right now ?. R they risk free as FD's & can we know how much returns they can give. Thanks Vikram.
irfan answers, hi, fmps are low-risk investments, but they are not risk free. the indicative returns (which could vary from the actual return) are mentioned at the time of launch. select an fmp with a tenure that matches your own investment tenure.
SUNIL asked, IN PRESENT SITUATION I FEEL IT IS BETTER TO INVEST IN FIXED DEPOSIT INSTEAD OF MUTUAL FUND . WHAT IS YOUR OPENION
irfan answers, hi, your risk appetite should determine your investment options. if you have a low risk appetite then FDs are ideal. risk-taking investors can consider mutual funds. investors can consider both options but the allocation can change based on their risk profile and investment objectives and tenure.
GIRISH asked, Hi Irfan, at this moment with high interest rates on FDs, is it better to invest in FMPs or bank FDs? Please advise....
irfan answers, hi, while the risk is higher in a FMP vis-a-vis an FD, the post-tax return on an FMP for investors in the higher tax brackets is more attractive vis-a-vis an FD.
KARTHIKEYAN asked, Is is really true, in three years (36 months) our investment will grow to double in MF ?
irfan answers, hi, there is no guarantee that your mutual fund returns will double over 3 years or even 5 years. returns are linked to the markets and investment skills of the fund manager/fund house.
mahesh asked, i have following mf/ ICICI PRUDENTIAL SERVICE INDUSTRIES -GROWTH Rs. 44000/- ICICI PRUD INDO ASIA -GROWTH Rs. 10000/- ICICI PRUD INFRASTRUCTURE FUND - Dividend Rs.10000/- reliance diversified fund growth Rs. 8000/- kotak opportunities fund - growth Rs. 4000/- reliance tax saver Ts. 20000/- Kotak Tax Saver Dividend Rs. 20000/- pl. advice me above m/f carry on for few month or switch to any other mf i need the the fund in dec. 08 regards mkgupta
irfan answers, hi, there are too many thematic/sector funds in your portfolio. these are risky investmnets; its fine to be invested in them so long as you have the risk appetite and a view on the underlying themes/sectors. else consider adding more diversified equity funds to your portfolio like hdfc top 200, dsp ml top 100, fidelity equity among others.
Souravh asked, Hi Sir- I have one kid. My salary is 450000 per annum. Please suggest how to invest to secure child future
irfan answers, hi, to know more about how you can plan for your child's future, please download for free the Guide To Planning Your Child's Future by clicking at: http://www.personalfn.com/investment/ms/archives.asp
NRIKuwait asked, I am a NRI based in kuwait(Delhi based),I can allocate upto Rs. 25K everymonth for investment...please suggest how to proceed. If u have a office at delhi, please provide contact person & telephone number to contact for future...
irfan answers, hi, please write to us at info@personalfn.com with your contact details, we will ensure someone from our delhi office contacts you at the earliest.
maithilesh asked, what is the difference between growth and dividend reinvest options which are available in mutual funds. and which is benefitial according to you.
irfan answers, hi, in the dividend reinvestment option the dividends are re-invested in the scheme so investor has higher no. of units. in the growth option, the onus to book profits is on the investor.
AMAN asked, Please give your views on DSP Gold fund?
irfan answers, hi, the fund is an actively managed fund which in turn invests in a fund that invests in companies mining gold and other metals. the risks associated with the fund are higher than a conventional gold etf.
Whirlmind asked, I wish to transfer-in my investment made through a broker to my icici 3in1 account and ICICI requires a No-Objection-Cert from the current broker. Does the current broker have a right to deny this to me ?
irfan answers, hi, according to sebi guidelines, your broker is obliged to submit the NOC.
Whirlmind asked, Is PAN required to invest in an index mutual fund like UTI Sunder ?
irfan answers, hi, UTI Sunder is an etf and you need a demat to invest in the same. opening a demat account in turn requires a PAN.
Gopinath asked, hi.. Do you think it's better to invest a lump sum in one MF or invest in multiple MF's (where the track record was good) as small amounts. Need your advise on this
irfan answers, hi, diversification is preferable, so you can consider having 4-5 funds in your portfolio. sips is the preferred mode of investing and not lumpsum.
Nirmal asked, Which is better in MF: dividend option or Growth option
irfan answers, hi, neither is superior to the other. the investor's need for liquidity should determine whether he must opt for the growth or dividend option.
Whirlmind asked, We often use short-term, medium term and long term.... How many years is short-term, how much is medium, how many is long term ?
irfan answers, hi, in the context of equities, in our view at least 3-5 years is the minimum investment tenure. anything less than that would qualify as short-term.
GIRISH asked, What are the tax implications on Gold ETFs?
irfan answers, hi, gold etfs are treated at par with debt funds for tax purposes.
atul asked, how much does your company charge for management of investment related services.
irfan answers, hi, please write to info@personalfn.com with your contact details to know more about this.
Whirlmind asked, Personalfn always seems to discourage rating of funds. But some rating, done well, taking maximum quantifiable parameters, is always better than no rating at all, no ?. Atleast for the individual investor who is looking for info online on his own, it is helpful, right ?
irfan answers, hi, not really. ratings are often inconclusive, in terms of aiding investors in investment decisions, they are at best a starting point. this is something that even morningstar, the pioneer of mutual fund ratings has admitted.
irfan says, hi, looks like we have run of out time, thanks for participating. write to me at info@personalfn.com with your queries.
