Union Finance Minister P Chidambaram presented his fifth Budget in Parliament on Friday.
Chidambaram said keeping inflation under check is one of the cornerstones of the government's policy. GDP growth, he said, has slowed to 8.4 per cent during the quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.
However, the economy grew over eight per cent over 12 successive quarters since 2005, the FM added. What impact does the Budget going to have on you? What investment plans should you make? Will it be proper to opt for mutual funds? 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?
Personal finance expert Rahul Goel answered to many such readers' queries during an hour-long chat on Saturday at rediff.com. Here is the transcript
Rahul Goel says, Good evening! Let's start the discussion on financial planning in the post budget environment!
ajpost1 asked, which is the best mutual fund to bye now in which one can get tax deduction
Rahul Goel answers, at 2008-03-01 14:56:10hi. with regards to tax saving funds there are no new proposals in the budget; the overall limit for section 80C remains the same - Rs 100,000. when it comes to selecting the best tax saving fund for you, the final choice will depend on your risk appetite and expectations of returns. there are aggressive tax saving funds, and then there are even index linked funds. if you are looking for a tax saving fund which takes a diversified approach to investing, then franklin india taxshield can be considered.
zsdf asked, My salary is 10.5 lakhs /annum,can u suggest some good investment options so tht i can save tax
Rahul Goel answers, hi. well you can save tax under various sections of the income tax act. you can invest under section 80 C. there is a variety of investment instruments which qualify for this section - both debt and equity. you need to pick and choose those which suit you best. then you also need to get the allocation right. if you are new to this, i recommend you read our free guide to tax planning. it available on www.personalfn.com
VINEET asked, Sir, i am new to invest in Mf. going to start sip monthly as below for 3 years for tax saving and good earning: - HDFC tax saver Rs 1000/- SBI magnum tax gain Rs 1000/- Reliance Growth Rs 1000/- For 3 year lock in period, suggest 2 good mutual fund @5000/- each for tax saving + Earning Also confirm, can i withdraw all above investment after completing 3 years? My portfolio is good or not? thanks
Rahul Goel answers, vineet, hi. please note reliance growth is not a tax saving fund. we would prefer that you have two tax saving funds in your portfolio... you can pick and choose the funds depending on various factors (mentioned earlier in this discussion). regarding withdrawal, you can withdraw only that amount of money which has completed 3 yrs in the fund i.e. the units you get for the first 1,000 , can be withdrawn in the 37th month. But the units you get for the last installment that you put 3 yrs from now, can be withdrawn only 6 yrs from now.
harmeet asked, I want to invest 20000 pm so that i get interset every year . Please suggest me something .
Rahul Goel answers, harmeet, hi. if you are looking at an annual income then you should consider low risk schemes like fixed deposits and fixed maturity plans from mutual funds. A little higher on the risk-return curve are the MIPs. depending on dependent you are on the interest that will be generated, you can build a portfolio comprising both low risk deposits/FMPs as well as relatively higher risk MIPs.
Pravith asked, I am planning a portfolio of the Following MF. HDFC Equity, Birla Sun Life Frontline Eq, Frank. India Prima Plus SC Premier Equity and Reliance Vision Fund of 4000 each month for each fund Is this a good portfolio. My objective is capital appreciation and am looking at a 5 years period to stay invested
Rahul Goel answers, pravith, hi. if you had come to personalfn with the objective you have stated above, and mentioned that you have appetite for risk, then the portfolio we would have recommended would have been quite different for sure. the common schemes would have been hdfc equity and franklin prima plus. the other schemes we woould have had in our portfolio would have been a mixture of value style funds, opportunities funds and maybe a mid cap fund, but in a very small proportion. our aim is to have schemes which are managed by brilliant teams of fund managers, with great track recors especially when markets fall, with a mix of styles of investing monies and importantly from solid amcs. please note that the allocation between the schemes will play an important role in the overall risk adjusted returns of the portfolio over the tenure of investment.
kannan asked, Is it worth in investing Mutual Fund , if yes systamatic or bulk buying
Rahul Goel answers, kannan, hi. this depends on several factors. if you are salaries, then SIPs is best for you as you can match your surplus to your investment cycyle. if however you have money at hand, then you need to evaluate the investment environment. if it was the third week of jan 08 all over again, then probably you should put in some of that money as a lump sum, the rest could be staggered. but given that timing is difficult, it may be better to opt for what are called Systematic Transfer Plans (STPs). If you are not aware of this, then please do acquaint yourself with STPs.
Pravith asked, How are HDFC Prudence and DSPML Balanced fund ? do you recommend this in a capital appreciation portfolio for 5 years
Rahul Goel answers, hi. in an aggressive portoflio for a 5 yr tenure there may not be need for a balanced fund. however, in a relatively moderate/conservative portfolio, balanced funds could find a place.
Pravith asked, How are HDFC Prudence and DSPML Balanced fund ? do you recommend this in a capital appreciation portfolio for 5 years
Rahul Goel answers, hi. in an aggressive portoflio for a 5 yr tenure there may not be need for a balanced fund. however, in a relatively moderate/conservative portfolio, balanced funds could find a place.
dayasagar asked, Rahul ji, Good evening. Kindly advise me which I.T. based Mutual funds are better to invest. Is it wise to invest in one or more MF's? My wife has retired on 31.8.2007. She submitted Returns till last year. Is it necessary to file her retrn when her pension is only Rs.6,500/-? Hwvr, she is getting interest on investments made in Banks and other places. Kindly help us by givin suitable sugestions. With best regards/Dayasagar/9810412963
Rahul Goel answers, sir, investing in IT funds is in our view a very risky proposition. this is true of any sector fund. do you have a high risk appetite? if not, i recommend that you do not consider such an investment. select schemes which suit your profile and needs the best. I am unable to guide you on the tax retailed queries. Sorry!
VENU asked, what are the best investment options in the long run. The MF's or the unit linked plicies
Rahul Goel answers, venu, hi. ULIPs are insurance policies, which also help you save some money. mutual funds on the other have are instruments to park your savings alone. so, in my view, there is no comparison really. if you want to invest, opt for instruments like funds. if you want insurance, opt for term insurance. but if you want a hybrid, which may not be cost effective, then you can consider a ulip.
jai asked, Sir, Could you please tell name of 2-3 best equity diversified funds where investment can be made through SIP in the horizon of 10-12 yrs.
Rahul Goel answers, jai, hi. i think what you should ask for is what are the funds that will suit you best. if you have appetite for risk, and are willing to be invested for the period mentioned, then you should consider funds like hdfc equity. over such a long tenure value style funds will do really well in our opinion. examples here are dsp ml equity and quantum long term equity fund (disclosure - personalfn and quantum mutual fund are founded by the same person - Ajit Dayal).
rvveer asked, Sir, I want to know weather the money back policies are the good for insurance and investmnet? For better investment which policied are good?
Rahul Goel answers, hi, if you are investing, then stick to bonds, deposits and mutual funds. if you need insurance, simply opt for term insurance.
jd asked, Sir, I am a S/w Professional of 29 years age. I will be married next year. my Father is retires who gets arnd 7k pension. so i dont have much liability. I have cash in hand arnd 10 lakhs and i can save arnd 20 k per month. Can you please give me exact direction for saving like which mutual fund/ppf/lic..so n so i should invest..can you tell me the name of the investment options that i need to invest. Thanks sir..
Rahul Goel answers, hi. i hope you will understand that it is difficult for me to give you a plan here and now. if you want guidance for this, then please read the Youth Special issue of the Money Simplified which is available on Personalfn.com. this is available free of cost. i hasten to add that before you commit any monies to any scheme, be sure you have an honest advisor as your service provider.
debasmit asked, hey sir, suggest me a equity based mutual fund for 20-30 % return per annum for 3 yrs outlook...thnx & regds, D Mukherjee
Rahul Goel answers, hi. well 20% - 30% pa for 3 - yrs is very optimistic in our view. our research indicates that a return of 15% or so is realistic. a well managed diversified equity fund should be able to deliver this (a poorly managed fund on the other hand could actually lose money for you in the same time period!).
srikant asked, HI. in mutual funds which is a good option growth or dividend option. And which is good in one time investment and SIP way also. Please suggest
Rahul Goel answers, srikant, hi. i have already dealt with the second question earlier in the chat. i will take up the first here... if you are not looking for any cash inflows from your investments then opt for growth option; the money compounds here and over the long term this has a big impact on wealth creation. on the other hand if you need inflows, then dividend option will suit you more.
kamal asked, Hello Rahul , am working for a MNC and my CTC is 9.5 lakhs , I have home loan and my ineterest for the home loan comes to 1.5 lakkh a yar and I have investments for 1 lakh now as the budget has been declared I plan to invest more in a childrens plan as have a 1 month old baby . So my question is which is a good investment option for my child and after investing another 50k +1 lakh already invested +1.5 lakh homeloan interst what would be my taxable income
Rahul Goel answers, kamal, hi. there are two good investments you can make for your child. one, you should take a term insurance for yourself so in the unfortunate situation of you not being there, the child is still provided for. two, you should start setting aside money for your child in a portfolio of assets consisting predominantly of diversified equity funds. some money can go into PPF maybe. you can invest every month so that the cost of investment is averaged. how much to invest will be a function of the monies you require for your child's future needs... your financial planner shulod be able to advise you on this.
debasmit asked, MR GOEL CAN U PLS SHARE UR VIEW UPON INDIAN SHARE MKT..IS IT ENTERING INTO BEARISH FACE..WHAT U THINK THE FUTURE OF INDIAN ECONOMY ALSO..ALONG WITH STOCK MKT..WHERE WE HEADED TOWARDS..BCZ DEPENDS ON THAT ONLY WE CAN CHOOSE QUALITY EQUITY FUND..HOPE U WILL ANS THIS QUESTION IN BRIEF..THNX SIR & STAY TUNE WITH UR GD WORK.
Rahul Goel answers, hi. in the long term the stock markets will reflect fundamentals of the economuy and companies. and in our view, the fundamentals are improving and will improve further in the years to come. so, from that perspective we believe that the stock markets offer an attractive investment opportunity from the long term perspective. sure there will be blips; there will be sell offs. but we are long term investors. and as long as long term fundamentals look good, we will look at such sentiment driven sell offs as selective investment opportunities.
Hasan asked, I'm really in need of some advise regarding the savings. I am an IT professional age of 24 yrs and I need to have the Tax benefit and it should be an investment for my future. I invested 12k for 6 months in NFO (ICICI Prudential). Any advise would be grateful.
Rahul Goel answers, hasan, hi. any reason you put money into an NFO? if you were a first time investor then, it is very likely that you have been misguided. maybe to begin with you should change your service provider / advisor.
chaks asked, Dear Rahul, I have got a saving of rs 1 lakh, I want to invest in MF - shall I go for SIP or ELSS? what do you suggest and which MF?
Rahul Goel answers, hi. SIPs are not schemes... they are only modes of investing in a scheme. you could even do an SIP into an ELSS. so, where you should invest the monies will depend on factors like your needs and tenure of investment. for me to be able to guide you, i need this information and more.
ram422 asked, My monthly take-home salary is 52K and expenses is 24K. I do have the appetite for risk to gain higher returns over long term. Investment(shares) 9 Lakhs, Investment(MF) 22 lakhs, Investment(PPF) 5.5 lakhs, FD 3.5lakhs. Dont own a house as I stay with my parents. Please comment on my overall financial portfolio and when can i retire? Let me know in case I need to rearrange my portfolio.
Rahul Goel answers, ram, hi. you have about 75% of your assets in the stock markets. the rest in debt. this is an aggressive portfolio geared for a long term investment horizon. now, you do not own property... are you likely to inherit any? do you not own any gold at all? you need to consider this from an asset allocation perspective. now, when you can retire... this will depend among other factors on how much monthly income you require to sustain your standard of living... if you retire today, you could earn probably rs 3 lakhs a year without taking any significant risk. if you need more than that, then you need to save more, and also remain invested for longer.
Darshan.F asked, Which is the best funds in the market? Most MF say a return of 40-50%? But you say 15% return on Equity based funds. Does that mean that it is better to stay away from MFs and invest directly in Stocks and FDs?
Rahul Goel answers, darshan, hi. 40% - 50% is not sustainable... you may earn that in 2 - 3 yrs at a stretch, but then there will be years when there will be losses. over a long term its best to plan for 15%. the last 4 yrs are an exception and one should not extrapolate these returns into the future. FDs return about 8% post tax... in case of stocks, you need to be solid on your research. there again you will win some and lose some. for most people we believe mutual funds should be the preferred investment vehicle.
Darshan.F asked, Which Organizations are you inclined to for MF's and Why?
Rahul Goel answers, hi again. well, we have a research process that we follow. its totally independent of personal biases. in fact of the 30 odd AMCs which are out there, personalfn's recommended schemes do not go beyond 6/7 AMCs. among these amcs are hdfc and templeton (we do not recommend most of their schemes though). a popular amc which does not make it to our list is SBI.
Rahul Goel says, Thank you all for participating in the discussion. In case you have any queries, please do write in to info@personalfn.com
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