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Do things like mutual funds baffle you? Are you aware of the investment options they provide?
What are the best mutual funds available in the market? Which funds accrue maximum profits? What are the crieria for evaluating a fund? Which funds provide the best SIP options? Are SIPs the easy way of making quick bucks? When and how should one buy mutual funds?
In an hour-long chat on rediff.com on Thursday, Rahul Goel, CEO, Personalfn.com, and financial planning expert, answered many such queries. Here is the transcript:
parag asked, i am 37, no invt made till now, what is the best way possible to do it from now
Rahul Goel answers, at 2007-10-25 12:54:57parag, hi. while we would have liked you to have started saving a lot earlier, its good that you are starting to invest. since you appear to be a novice, its best that you employ the services of a professional. in case you wish to read up, you can download the free financial planning guide for inevsting in mutual funds from personalfn - www.personalfn.com/investment/ms
Reddy asked, Can u Suggest the which are Best MF among SBI [Get Quote],ICICI [Get Quote] Prudentail,HDFC [Get Quote] or any other
Rahul Goel answers, reddy, hi. at personalfn our view is that the best scheme for you is the scheme which suits you best. one scheme may be the best for me, but the same may not be a good investment opportunity for you. we recommend that you evaluate schemes and funds from this perspective.
tuhin asked, Hi Rahul. Is it OK to invest in MF at these level. I am looking to invest approx 10K monthly in market. My time frame is 3 years. Do you see stock market touching 35K within next 5 yrs. Thanks!!!
Rahul Goel answers, tuhin, hi. the stock markets frankly are driven by a few large stocks and their long term performance will drive the sensex. coming to whether you should invest now, well, now is as good a time as any to start as SIP. but its important in which schemes the monies is going into. we recommend you avoid the sector funds; go in for the plain vanilla diversified equity funds which are well managed.
yatin asked, hi Sir i am an NRI and have no clue what so ever of investment.Presently i have invested in LIC [Get Quote] and planning to invest in MF can u sugest me in which mutual fund shall i invest right now so that i can get the returns say after 20 yrs, i assume that by investing around Rs 5000 each in any 3 top MF for that period may end up me around 1 crore..........plz correct me
Rahul Goel answers, yatin, hi. if you invest about rs 5,000 pm for 20 yrs, you will have a maturity value of about Rs 65 lakhs assuming you are able to compound money at 15% pa. if you have appetite for risk put some money in funds like hdfc equity and fr india flexicap. your financial planner should be able to guide you on a more detailed investment plan. before committing any monies try and ensure that the advice you are getting is honest.
pravin asked, Hi! rahul, good afternnon, iam 29 earning more than 5 L p.a. iahev invested 25 k in ulip aviva 25 k in LIC, 25 k In ELSS sbi magnum taxgain, what other investment you suggesr, i ma slo thinking of entering into equities directly, do you suggest any IPO's coming up??what should i do more to save Income tax??
Rahul Goel answers, pravin, hi. first and foremost, avoid investing more in ULIPs. first take term insurance which will cover you for the next 30 yrs or so. second, do not invest to save tax. rather invest in a manner which suits your needs and also helps you save tax. finally, avoid 'enter'ing into equities unless you are serious about it and are willing to devote a lot of time studying it. its best that you do some serious thinking on how you should go about managing your money!
Moneysh asked, Hi Rhaul!! You have mentioned about core funds in portfolio during last chat.. what are core funds and which types of funds are considered core funds
Rahul Goel answers, hi. let me explain it this way. when you are building your house, you pay the max attention to the foundation and the pillars when it comes to building a strong house. rest all is decoration. similarly when you are building your portoflio, you need to have the 'foundation and pillars'. this would comprise of very high quality investments which may not deliver you the highest returns, but are still likely to do very well without putting all your money at risk by investing irrationally. so if you are young and have appetite for risk, your core could include equity funds like hdfc equity. but if you are retired, your core could be the sr citizen scheme.
nitin asked, Hi Rahul, Which do you think is a better way of buying mutual funds? Is it directly from the mutual fund house or companies like ICICI Direct? Any difference?
Rahul Goel answers, nitin, hi. generally we find people confusing recommendations with ease of investing. if you have great execution, but poor advice, you will not make much headway. but the other way around, you may need to spend some time filling forms etc, but you know it will work. so, our call is go with the person who can give you honest recommendations.
pradeep3011 asked, Hi, My annual earning is 5lacs, I have taken LIC insurance 16500, Bajajallianz ULIP 25000 and recently taken Magnum taxgain 20000, DSPML Tiger 5000, ICICI Infr. 5000, JM Contra 5000. I want tax saving and also money growth. Please advise what more to invest and in which.
Rahul Goel answers, pradeep, hi. i think you need to revist the entire investment planning you have done. your top priority should be to have adequate life insurance to take care of your dependents. so for that term insurance is necessary. then, when you are investing monies in funds, you should build your "core" before venturing into the more exotic funds if you will. if someone has advised you on this, its time to meet up with him and ask him some tough questions.
sipu asked, right now which mutual fund gives me better return for a 5yr term and also tax saving purpose.Should i invest in sip?
Rahul Goel answers, sipu, hi. over a 5-yr term well managed equity funds should deliver the best returs. however, there are downside risks... you need to select funds which suit your risk appetite best. best would be if you invest in a basket of 5 funds, which could include tax-saving funds, via sip. if your fund selection is good, then you should be able to earn an attractive return over the long term. do you have someone guiding you with this?
Amitabha asked, Hi, If I keep on investing in Taxsaving SIP on regular basis @ 2000 for 15 years what will be minimum approximate return?
Rahul Goel answers, amitabha, hi. we currently expect a well managed equity fund to return about 15% pa over the next 3 - 5 yrs.
Lucky asked, I am 25 year old and have invested 24k in ELSS, 10k NSC, 28K in LIC, 24k in ULIP and 16k is deducted towards PF totalling over 1 lakh. So my tax side is safe i guess. In the ELSS, I have opted for HDFC Long Tem Advantage, ICICI Pru Tax plan, SBI Magnum Tax Gain, Franklyn India tax shield. Please let me know if the choice is fine. Also i want to do some more investment in mutual fund. please guide me.
Rahul Goel answers, lucky, hi. yuo have invested in five tax saving schemes! we usually recommend to our clients at personalfn to have money in just two of them. with regards to the 100,000 allocation, i think you could have done better if the NSC were not there, as you already have exposure to debt via the
AditGupta asked, Should I choose a ULIP for my children aged 8 and 5. or take regular insurance and invest in MF's regularly. I am 35 and have already invested in MF's to the tune of 3.0Lacs both directly and thru SIP mode.I also have insurance for me and my wife.
Rahul Goel answers, hi. ensure you have adequate insurance for yourself (use the Human Life Value calc on personalfn.com). and for your children, invest in a basket of mutual funds. ensure you put money into the right funds... seek professional guidance if need be. it will be worth it.
harry asked, Hi, I am investing in the following MF's 1>Principal Personal Tax Saver 2>HDFC Growth 3>SBI Magnum 4>Birla Sun life I am a 24 years chap I want to know should I invest all the money in MFs or should I invest some amount in PPF ? My second question is In moneycontrol I have seen that SBI MAGNUM growth is among the top 5 funds but In the past I was not aware of the investment strategies so I put all the money in SBI Dividend plan.Please let me know is both are the same?
Rahul Goel answers, harry, hi. first the funds you have invested in. assuming that you have an appetite for risk and are willing to remain invested for atleast three years, the portoflio that personalfn would have suggested to you would have been completely different. you need to work on your scheme selection for sure. since you are young, you can take risk and therefore no harm in having most of your monies in equitis. you could maybe allocate a small portion to PPF over time.
rahul asked, i am 30yrs old and am working as marketing manaer..i am married and am soon going to be dad....my per annum income is rs.5.5lacs and cant understrand how can i save for the future?
Rahul Goel answers, hi. well, you need to identify an objective... the rest will then flow. in this case it could be your child's education. or even your retirement. you will need someone to guide you with this. but here are a couple of guidelines. 1. take pure term isurance for yourself. 2 do not invest in a ulip 3. ensure you have employed the services of a honest finanical planner before investing any monies
NitinS asked, Hi Rahul, First GREETINGS AND WARM WISHES FOR THE FESTIVE SEASON. I would like to know about your opinion on prospects of ICICI Pre Infrastructure Fund (G), SBI Magnum GLOBAL(G) through SIP mode for a period of 2-3 Years( Investment undesr SIP) and Encashment after 3-4 years from Now. Also I would like to know is it advisable to continue Investment and hold ICICI Service Industries Fund(G), Fidelity india Spl situations Fund (G) for 2-3 years (SIP) and ELSS like Fidelty Tax Advantage (G), Reliance [Get Quote] Tax Saver (G) for a period of 4-5 years. The last 4 funds are not HOT favourate currently but based on their portfolio, Asset Size, gradual performance/ranks over a couple of years have made me choose them. Your Opiion Please. I also try and usually invest nearly 50K / Per Year in PPF.
Rahul Goel answers, nitin, hi. at personalfn we recommend that clients do not invest in sector funds. we think that most of these schemes are simply marketing initiatives to mobilise funds. but yes a very few of them can find a place in a portolio of a person with a high risk appetite. in any case sector funds should not account for more than 5 - 10% of your portfolio.
chandra asked, heelo sir, i am 40 year old working in oil field,not yet invested in any funds other than FD & LIc. which is best way to invest
Rahul Goel answers, chandra, hi. its a bit late for you to take insurance. you should consider inevsting in a mixture of equity funds, debt funds and deposits. for a detailed plan, best you employ the services of an honest financial planner.
harry asked, I am a regular investor and long term investor : saving 15000k Per month and I am investing all the money in MFs as the sensex is currently in 19000 benchmark so should I continue to invest in MF's or every month should I wait for sensex to go down and then invest ?Please advice?
Rahul Goel answers, harry, hi. we recommend that you continue to invest monies as per the plan you have. market timing in our view is not possible. not to mention the fact that it will take up a lot of your time.
Bidhu asked, Hello Rahul. How do you rate these international funds..we are hearing a lot about them.
Rahul Goel answers, bidhu, hi. we have recommended to our clients at personalfn that they avoid investing in the international funds that have been launched so far. some of the issues we have are the cost structures, the ultimate manager of the fund...
chakri asked, Hi rahul i wish to invest 10000/- per month which is the best mf i can invest
Rahul Goel answers, chakri, hi. for us to be able to guide you, we will need more information about you. remember there is no "best" fund... we need to find funds which "suits you best".
Pankaj asked, I am 35 yrs old and is able to save about 15K after all monthly expenditures and repayment of Housing Loan EMI etc.. Could you suggest where should I invest this money to build long term wealth.
Rahul Goel answers, pankaj, hi. well managed diversified equity funds are a great way to build long term wealth. but you need to be aware of the near term risk that you carry by being invested in such funds.
Binita1930 asked, please let me know that how one can know that which one is the good MF.
Rahul Goel answers, binita, hi. i will take a short cut here... pl can you download the guide on mutual funds from personalfn, free of cost. you will find it here - www.personalfn.com/investment/ms
rto asked, hi rahul In SIP option how will my investment returns grow when NAV of particular scheme is increasing most of times. i will get less no of units each time which will impact returns in longer time. is it better to directly invest the total amount which will give more no of units.
Rahul Goel answers, hi. the fact that the markets conitnue to rise will be known only in hindsight! the markets do go through cycles and just as you invest when markets are rising, you will be investing when the markets are falling. over a longer period of time, the sip will help you invest in a scheme at an attractive average cost.
Rutwig asked, Hi Rahul suggest me some Mutual funds for Equity diversified i am looking to purchase DSP ML TIGER,Reliance Growth and Reliance diversified Power. Also suggest should i go with SIP or invest lumpsup
Rahul Goel answers, hi. incidentally none of the schemes mentioned by you are diversified in the true sense!! tiger fund is thematic in nature; reliance growth investments in mid cap companies nd reliance power in the power sector. you need to select funds which invest across sectors. sips would be preferred way of investing in current times.
saket asked, I Planned to invest in Kotak Safe investment Plan II Rs.50000 per year premium for 3 years. Can it be good investment solution for safe & assured return. kindly advise.
Rahul Goel answers, sakest, hi. what you are referring to is a ULIP. pl make yourself aware of the cost of owning a ULIP. our research indicates that it will take you about 10 - 12 yrs to break even on the cost of the ULIP as compaered to a mutual fund.
manish asked, Hello Sir, I'll investment in mutual fund or ULIP, which mutual fund or ULIP is the best.
Rahul Goel answers, manish, hi. ULIPs and mutual funds are completely different products. yes some insurers do sell ULIPs by terming them as mutual funds but that is misleading.
chakradhar asked, Hai Rahul, I think investing upto 1 lakh is tax exempt according to 80C. Is it that investing any mutual fund is tax exempt or only for some type of MFs.
Rahul Goel answers, hi. only designated tax-ssaving schemes, offer a benefit under section 80c. pl confirm this before investing any monies.
subrata asked, Do you think that the present market volatility may affect the MF investors who are looking for 3-5 years horizon?
Rahul Goel answers, subrata, hi. since equity funds invest in the sstock markets they do get hit by volatility. but over 3/5 yrs, a smart fund manager should be able to outperform the markets.
mayur asked, What is vanilla diversified equity funds ?
Rahul Goel answers, mayur, hi. sorry for not using a simpler term. what i meant was the regular diversified equity fund... like an hdfc equity.
YASHWANT asked, I WANT TO INVEST IN MUTUAL FUND. I HAVEN'T INVESTED IN MUTUAL FUND OR SHARE BEFORE, PLEASE ADVISE WHICH FUND SHOULD I INVEST?
Rahul Goel answers, yashwant, hi. first i need to know more about you to be able to recommend where you should invest. two, you need to understand the mutual fund product. as i have suggested earlier in this discussion, pl download the mutual fund guide from personalfn (free of cost) for the purpose.
yekay asked, what type of investment is ICICI Prudential ULIP? Is it a mutual fund or insurance plan
Rahul Goel answers, hi. a ULIP is an insurance plan.
sameer asked, Hi Rahul can u please suggest what is the best way to invest money
Rahul Goel answers, sameer, hi. one way could be to identify your objectives, devise a plan to reach these objectives, select the instruments and then commit monies to them. i know it sounds simple, but then this is what financial planning is all about. discipline is the key.
abhijit asked, sir, with no major fundamental changes happenning, dollar-rupee parity gone for a toss n crude oil prices going higher n higher with the markets showing unprecedented volatility, is it wise to invest in equity-related instruments?
Rahul Goel answers, abhijit, hi. if you asset allocation demands that you be invested in equity, then you should. however given the frothiness in the markets, you may want to reach the desired exposure over time as against instantly. this can be done by entering into SIPs.
vgpal asked, Hi Rahul. I'm planning to invest in MFs, what is the minimum amount I need to invest. My major query is when will I get the returns.I mean is it purely my decesion to close my MF or there is a stipulated time period like maturity of the MF like in Insurance policies.
Rahul Goel answers, hi. open ended mutual funds do not have a maturity date. you can withdraw whenever you wish to subject to the exit load, if any. i think the minimum in some schemes is as low as rs 500 but its best to cross check with the fund house you are planning to invest in. if you are investing in equity funds, expect returns over 3 - 5 yrs.
KAUSHAL asked, Keeping for 2 to 3 years period, can present good MFs give more than 20 % returns
Rahul Goel answers, kaushal, hi. over 3 yrs, a 15% return is realistic in our view.
ganpath asked, Hi Rahul, Good morning I am having 2 children and plan to invest about 3K for their higher education. can i invest HDFC MF or HDFC childre care insurance
Rahul Goel answers, ganpath, hi. the mutual fund may be a better option. have about 4 funds to begin with in the portfolio from diff amcs.
yogesh asked, Hi Rahul, I want to do nominal investment in NSC (say upto Rs. 5000 pm), what is your opinion and what could be an alternative option for doing small scale investments?
Rahul Goel answers, yogesh, hi, the answer to your query will depend on your risk appetite and not on the quantum of investment. if you can take risk then you can consider equity oriented schemes. if not, then close ended debt funds may be a tax efficient option for you to consider.
prakash asked, I am 47 years old now and expect to work and save for minimum of 15 years from now. Can I look at mutual funds as an investment method for retirement plans. If my current monthly expenses is about Rs. 10,000/= (necessities) . What amount should I save regularly and for how long to atleast maintain the current standard of living. Prakash
Rahul Goel answers, prakash, hi. yes, you should look at mutual funds. assuming you live till 80 yrs, and the pre and post retirement inflation is 6% and 8% respectively, then you need to set aside about rs 7,000 pm at 15% pa to meet your needs. pl note we have not factored in medical and travel needs in this. but this should get you thinking!
parikshit asked, Hi Rahul, I want to invest in high return mutal funds. What would you suggest, a combo of top equity MF's or a single MF ?
Rahul Goel answers, parikshit, hi. its best to have a basket of 5 - 6 funds to invest in. but you also need to be sure that you are invested in the funds which suit you best.
Parveen asked, Hi I have recieved Rs.8 Lacs from some mutual fund redumption.I wzant to invest it profitably for SIX months thereafter I need the funds.
Rahul Goel answers, praveen, hi. go in for what are called FMPs. these are very tax efficient and relatively safe. match the maturity of the FMP to the date you need the funds.
krishna asked, Sir, I have shortlisted UTI Nifty index fund and SBI Magnum Index fund among Index funds . What is your take???
Rahul Goel answers, krishna, hi. any particular reason you wish to invest in index funds? we would prefer you opt for actively managed funds instead.
Siladitya asked, Hi Rahul,I am working in a MNC kolkata and want to invest for 2-3 years and want to get a hansome return from it.Could you please tell what will be better option is it mutual funs or shares?
Rahul Goel answers, sila, hi. if you have several hours a day to identify and invest in stocks (assuming you have the skill) then opt for stocks. else, go in for mutual funds.
Rahul Goel says, Thank you all for participating in the discussion. See you all next week!
Chat with Rahul every week!
For more transcripts, click here!
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