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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 financial planning expert Irfan Rupani replied to many such readers' queries. Here is the transcript:
irfan says, hi, good afternoon, lets beginPankaj asked, Hi Irfan, I currently invest Rs 1000 monthly by SIP in 9 mutual funds. DSP TIGER, DSP Tax Saver, Principal Personal Tax Saver, SBI [Get Quote] Magnum Tax Gain, HDFC [Get Quote] Tax Saver, Reiance Tax Saver, Franklinn India Blue Chip, Sundaram BNP Paribas Select Midcap, Reliance [Get Quote] Vision. Which funds should i add to my portfolio?
irfan answers, at 2008-07-23 12:47:52hi, you have an over-diversified portfolio. for eg. you have 5 tax-saving funds. ideally 2-3 tax-saving funds should do the trick.
anand asked, Good morning Mr. Rupani. Has midcap funds lost their charm? Is it still safe to hold investments in midcap funds?
irfan answers, hi, mid caps have not lost their charm. mid caps need a longer investment time frame than large caps, because of their inherent nature. so long as you have the risk appetite for it and have a long enough time frame, mid cap funds should be fine.
namrat asked, Can ur goodself name some of the best performing funds which we can invest now?
irfan answers, hi, there is no such thing as best performing funds. different funds could appeal to different investors based on their risk appetite and investment objectives.
mike asked, Hello Irfan, I am an NRI 50 yrs old and will retire in about 6 months time. Is it necessary to include MIPs in the portfolio or other lower risk avenues like sufficient to meet income generation? Please advice.
irfan answers, hi, if you are going to retire in 6 months, mips may not be the right investment for you. write to info@personalfn.com to know more.
kumar asked, Hi currently I hv these MFs - Reliance Vision, Reliance Diversified Power, Templeton India Equity, Fidelity Equity, AIG India Equity fund and Sundram SMILE. Which of these MF are good bet for more investment at this point, what are top 3 Large cap funds would you sugegst to invest at this point of time
irfan answers, hi, in the large cap segment we like funds like dsp ml top 100, hdfc equity and franklin bluechip. however, their inclusion in your portfolio depends on your existing portfolio and your investment goals.
raj asked, Hi, I have been investing in MF since last August with SIP. In the month of June and July 08 when sensex was hovering between 12.5-15k I invested considerable amount of sum as I can buy cheap funds. Is this decision of mine good or you think it should have been otherwise. Thanks in advance.
irfan answers, hi investing via an sip is a good idea. however, ensure that the sip is for a sufficiently long time. to know more please read our article http://www.personalfn.com/detail.asp?date=7/18/2008&story=1
RAM_007 asked, I invested Rs. 70k in ULIP (without life insurence coverage - Tax Benefit). Plz tell me appx. how much loss I have to bear if I had invested the same amount to MF (Tax benefit). I invested it in Dec. 2007. Was it a mistake? My friends are saying that within the 3 years (locking period), I will lose appx. Rs. 20k. Is it right. Plz tell. Will I gain some % money on it. Appx. how much % money I will gain.
irfan answers, hi, since ulips are market-linked it is not possible to predict returns. from your query its not very clear whether you have an independent insurance cover or not. if not, getting one is very important.
Ketan asked, Hi Irfan, looking at the market conditions, is SIP a good option to invest into? I have just started my first MF investment in ICICI [Get Quote] Infra with 1000 SIP. Please suggest good MF, not considering the tax benefit.
irfan answers, hi, making your first mutual fund investment in an infrastructure fund is not a prudent way to invest. first build a core portfolio of conventional diversified equity funds/balanced funds before investing in high risk funds like infra funds.
Fakhruddin asked, Hi, I hve invstd in TATA Infrastructure Fund @ par in Dec 04'. The NAV shot to 45.465 in Jan 08'. After so much of Ups & downs, tday it stands at mere 27.835. Can I get ur opinion on what cud b the performance of this fund in the near future. And shud I remain invested expecting to get through the 45.46 benchmark or shud I redeem.
irfan answers, hi, dont worry. this is how thematic funds (infra) typically perform. so long as your risk appetite permits such an investment and you can time your exit from the fund (i.e. have a view on the theme), you should be fine.
kesarirs asked, Hello sir, I'm a self employed professional aged 34 yrs � married & having only child aged 3.5 yrs. My total earnings at present are 32000 pm appx. My current monthly investments are: 3000 in reliance tax saver, 2000 reliance growth fund, 1000 in reliance regular savings fund � equity and 2000 pm in Post Office RD. Please comment on the selection. I also want to know which fund(s), I should go for if I can afford additional 6,000 pm, out of which 2,000/- should go to an ELSS fund. Please suggest.
irfan answers, hi, your portfolio lacks diversification at the AMC level. good to know you have allocated a smaller portion of your portfolio to assured return schemes like PORD. without knowing what goal you have set for yourself, i will not be able to comment on how adequate/otherwise your investments are. maybe you can write to me at info@personalfn.com with more details.
anand asked, Mutual funds on dividend options have a tendency to allow the NAV to appreciate substantially before declaring dividends. Is there any guideline which make these funds declare at least one annual dividend? In a falling market, all appreciation is lost, and so is the dividend.
irfan answers, hi, dividends are declared at the discretion of the fund house, subject to the availability of a distributable surplus. also there is no compulsion on a fund house to declare dividends. investors should choose the growth/dividend option based on their liquidity needs.
mohan asked, Is it good to select one funding agency - SBI- and invest around 2 lacs in it or go shopping in various agencies, and make life difficult to track?
irfan answers, hi, the trick is to be well-diversified without being over-diversified. by investing in funds from just one fund house you take on risk by losing out on benefits of AMC diversification.
JAYARAM asked, WHICH MF ELSS IS GOOD FOR TAX BENEFIT?
irfan answers, hi, we like franklin taxshield, fidelity tax advantage, hdfc long term advantage, among others.
gg asked, I want to invest for my child. Are children benefit funds are by several AMC's good to invest?
irfan answers, hi, you must first define the amount needed to provide for your child's life stage events like education, marriage. then you can go about investing in mutual funds, life insurance, bonds among other investment avenues. dont look only at children funds launched by mutual funds.
manoj asked, Hi Irfan I have invested in HDFC Proudence Divident fund (2K) at the NAV Rs-30 now it is at Rs 22-23 what should I do ?
irfan answers, hi, hdfc prudence is among the better managed balanced funds.
suresh_rathod1 asked, hi r u there which area should i have to focus for tax saving
irfan answers, hi, if you can take on risk, then ELSS (tax-saving funds) should dominate your tax-saving portfolio. else you must consider assured return schemes like NSC, PPF and tax-saving FDs among others.
Jyotis asked, How to creat 1 crore in 20-25 years by investing in MF SIP
irfan answers, hi, recommend that your personalfn's crorepati calc by clicking here: http://www.personalfn.com/asset/activitycentre/crorepati1.html
ptlskumar asked, Sir, Please explain in debt funds whether the interest/dividend is paid monthly or quarterly or annually
irfan answers, hi, debt funds declare dividends based on the fund house's discretion. the frequency will depend on the option (monthly/annual).
callingabhijeet asked, Is it good time to invest in Mid and small cap oriented MF.
irfan answers, hi, i have addressed this query earlier in the chat. please refer to the same.
Murari asked, Hi, What will be the returns for reliance growth fund and equity fund in 5 years ?
irfan answers, hi, i am unable to give an accurate growth estimate. but a well-established equity fund should give a 15% compounded growth (CAGR) over a 5 year period.
ravi1 asked, I am a new to mutual fund schemes. I want to buy mutual funds for Rs. 100000 as one time investment. I want to keep it for 6 years. Which mutual fund I should prefer.
irfan answers, hi firstly invest via an sip instead of a lumpsum investment. your portfolio should have a mix of large cap, mid cap, balanced funds and debt funds based on your investment objectives.
guest asked, Do you think a portfolio manager who manages your investment in mutual funds and others,are influenced by their personal returns while making investment decisions or choosing funds? Can you recommend any good institution , which in your opinion, is good?
irfan answers, hi, it could and does happen that is why there are so many instances of mis-selling in the mutual fund/insurance industry. to know more please read this article: http://www.personalfn.com/detail.asp?date=3/5/2008&story=5
Dhruv asked, Hi I have a surplus of 3 lac to invest which i would need after 3 years to make downpayment of my Home loan . Should I invest in equity or debt ?
irfan answers, hi, it certainly can't be an equity fund since you must have a 3-5 year time frame (at least) for investing in equities.
mohan asked, following p dhruv's question you answered, is it bad enough to invest in equity funds of now, and you suggest wait some time. Mean while go for fixed deposits?
irfan answers, hi, first, we are not in favour of timing the markets. just a 3-yr investment horizon is insufficient for an equity investment. a 3-5 year investment horizon is more apt.
balamurugan asked, Hi, i would like to invest 2000 each in Rel Growth and SBI Magnum Contra Fund. Do you think both are aggressive funds or is it ok? Pls advise
irfan answers, hi, both are aggressive funds. if you have the risk appetite for the same they should be fine for you.
ravi1 asked, Hi, I have planned for SIP, but if I want to go for fixed amount investment which one is the better option. Tax savings schemes are not useful as my tax savings are already crossed 1 lakh.
irfan answers, hi, sips can also be made in non-tax-saving funds like diversified equity/balanced funds. sips are the preferable way of investing. of course you can always make lumpsum investments in a staggered manner in the same fund where you have a sip running.
irfan says, hi, looks like we have run out of time. thank you all for participating in the chat. for more queries please feel free to write at info@personalfn.com
Chat with Irfan every Wednesday at 1 pm
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