Rediff.com« Back to articlePrint this article

SIPs are not a way to make quick money

June 28, 2007 14:31 IST

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?

Rahul Goel director and CEO of Mumbai-based Quantum Information Services Pvt Ltd, the owner of www.equitymaster.com and www.personalfn.com answers all your queries.

Rahul Goel says, Hi this is Rahul Goel and I we happy to answer your financial planning and related queries.


sak asked, hi, i am new to MFs.I would like to invest Rs3000pm in MFs. Which MFS should I go for.
Rahul Goel answers,  at 2007-06-28 13:00:40sak, hi. you should select the funds in line with your risk appetite and return expectations. any honest financial planner should be able to guide you on this. one advice - avoid the new fund offers.
munu asked, Hi, I have to show "1 Lac" investment this year to my present company. Please suggest where to invest excepet Insurance.
Rahul Goel answers, planning your section 80 c investments is very important. unfortunately most people do not spend much time on this. i think what you need to do is evaluate your long term needs and then invest this rs 100,000 in line with that. so for example if your need is 5 years away and you can take risk go in for well managed tax saving funds. do sepnd time on this before committing any monies.
mandar asked, I want to know if this is the time to invest in a diversified mutual fund, since the market is already at its peak
Rahul Goel answers, the stock market index may be at an all time high. but this does not mean that the valuations are at an all time high!pl always look at valuations and not absolute numbers. the stock markets presently seem a bit pricey but they are definitely not over valued by a huge margin. be cautious though. now coming to diversified equity funds, i recommend you select a well managed fund and put money in small installments at regular intervals. this will reduce the risk of mistiming the market.
sudhakar asked, which option is best for MFs whether grouth or divident
Rahul Goel answers, you should go for the growth option if you are saving for a long term need and do not see any near terms cash needs. however, if you are living off your investments, then dividendds are an option. also dividends effectively help you book profits. this is with respect to equity funds. also evaluate the tax angle.
thinkrich asked, is mutual fund as a long term not a misnomer? Suppose my fund appreciates by 60% in 2 years and instead of redeeming i keep invested and at the end of 5 years there is a crash, wont it affect my portfolio?wouldnt it be prudent to remove u'r profits in intermediate
Rahul Goel answers, the stock markets willl go through a cycyle. when you are investing your monies you need to be clear why you are investing and also for how much time will you be invested. once you are invested you need to continuously monitor your investments. and as the maturity date nears, you need to de-risk yuour portfolio by moving from risky to less risky assets.
pd asked, i have invested in magnum contra fund, in more than a year and 1 month it only gave me 11 %. should i keep the fund or sell it
Rahul Goel answers, Personalfn does not recommend its investors to invest in magnum fnuds even though they areamong the top performers. we look out for funds which are process driven and are therefore consistent performers over time. we afavour teams managing your money; we are not in favour of star fund managers. when the star fund manager leaves all sorts of issues come up.
kowshik asked, Hi , This year I am going to invest approximately 70000 in ELSS. Out of that 14000 is going to be invested in HDFC taxsaver & HSBC taxsaver in SIP. What should be my approach for rest of the amount. Should I go for my current schemes or go for a new ELSS scheme?
Rahul Goel answers, i assume you have a long term outlook and that is why you are investing in elss schemes. even in elss schemes there are different tyoes - aggressively managed, value style (relatively less risk) etc. you should selec tthe scheme which suits your profit best. your advisor should do this (unless he is worried more about his commission as against your need).
xmas asked, How do you approach your MF investments? are all your investments long-term?
Rahul Goel answers, if you ar einvesting in equity funds, then you must have a 3 year outlook, minimum. also you should have the apppetite to bear near term losses. in debt however, you can invest for as short a tenure as a day, with very little risk.
ups asked, Hi rahul, I have invested in Reliance Long Term Equity Plan (G) last year as one time investment but it has not shown much increase, is it gud 2 stay with it or sell....
Rahul Goel answers, Personalfn, the finanical planing initiative I respresent, does not offer a vuew on reliance fnuds... sorry!
veenadeshpande asked, sir, good afternoon, I have got some money in bank (saving account)Kindly advise me best option ., whether I should invest in mutual fund or I shold pay back my housing loan patrially( I have taken 8 lac loan from HDFC-floating and not rate of int. is 11%) I can not invest in share market as I don't know anything about that and I have already crossed my insurance limit of 1 lac.
Rahul Goel answers, very good question. firstly, you should not keep money in a savings account. all yuou earn is 3.5% and that too is taxable. put the money iin low risk liquid funds ... you will earn about 5% post tax (varies). secondly, depending on your appeetite to carry a liability on your books you should decide whether to repay the loan or not. if you are not comfortable with debt, pay it back. do not worry about the stock markets delivering a better return. financial planing helps you meet your goals; it is not only aimed at delivering the best return.
mintoo asked, which SIP is the best for investment for tax saving and max. returns with proven performance for last 5 years? if i have rs. 1 lac in my savings bank account, what should be the best investment option - FD, MF, SIP, IPO, secondary mkt. or wait till another HUDA/PUDA/DDA scheme comes along to solve house problem?
Rahul Goel answers, an sip is a way to invest in an asset. its not an asset! also, before you deiced wheter to invest, ask yourself, why you want to invest. if your need is clearly defined, you should not have a problem in identifying assets where you should invest. your financial planner should guide you on this.
ravi asked, Sir, Will you recommend the best SIP on the charts today?
Rahul Goel answers, when investing your money do not focus too much aout which fund has been the best performer. identify funds which will deliver returns by taking as much risk as you can bear. in a rising market, the more risk you take, the more return you earm. but when the sentiment turns, such funds are the worst hit. so select funds which suit your needs and profile.
Sagar_1957 asked, Sir, Good afternoon. Kindly advise me which funds provide the best SIP options and which are SIPs the easy way of making quick bucks? When and how should one buy mutual funds? Whether I can buy ongoing Reliance Equity Fund which is closing 12th July 2007? With best regards Daya Sagar sagar_1957@rediffmail.com
Rahul Goel answers, SIPs are not a way to make quick money. in fact you should have a minimum time period of 3 years for the inbvestment to deliver. you can buy mutual funds though our bank or broker. but the trick is to identify a financial planner who will identify funds which suit you best... not funds which will pay him a higher commission.
Saraswati asked, Hi Rahul, I am 40 yrs old single woman with very little knowledge of mutual funds. I have following investments made till date. PPF 1 lac, HDFC Young star plan sum assured 600000, LIc Jeevan Shree 5 lac LIC money back 1lac. How can I create my retirement corpus? I have a take home salary of 55000 but pay approx 7000 EMI for car loan. Pl advise-Saraswati
Rahul Goel answers, saraswati, hi. i will need mor einformation before i can give you a concrete plan. one thing is for sure - you have too much of insurance in your portfolio. pl avoid taking any more policies till your finalise the overall plan. On personalfn.com you will find a free to download retirement planning guide... that may be of help.
Neeraj asked, one very basic question ...why mutual funds always reflect the truely index trends .... last year when index felled to 9000 level then all the mutual funds dropped in the same fashion ... as an investor we expect the fund managers to handle these situations ..
Rahul Goel answers, if you see one year data, yes, mutual fnuds are trailing the index returns. however, if you see longer term data, well managed equity funds have outperformed the index by huge margins. we prefer activrely managed funds to index funds.
Varun asked, Sir, I do invest in Few Mf's (SIP), from last 2 yrs, monthly Ivestments is 6000 for 6 sip's. Where else u suggest to invest other than MF's
Rahul Goel answers, depending on what the ideal asset allocation for you is, you should invest in gold and debt. while buying gold be very careful... some banks charge a 15 - 20% premium. avoid buying from such places.
AJS asked, Sir, I am holding Frankin India Prima Fund Growth it is having a SIP of 2000 PM should I hold or exit ? Thanks for your answer
Rahul Goel answers, It s well managed fund which has had a poor couple of years. over time however, the fund management skill will, in our view, deliver. we continue to look at the scheme favourably. however, you need to invest in the scheme only if it suits your risk appetite. its a mid cap scheme which carries high risk.
Sri asked, I have a SIP in DSP ML (G)..should i remain invested?
Rahul Goel answers, You have not given the name of the scheme. as a fund house, we like dsp ml amc. at personalfn we research all mutual unds. we find that of the 30 or so mutual fnud houses, only about 6 to 7 should figure in your portfolio. your portfolio, for a particular need, should ideally not have more thnan 6 schemes. and of course, there should be very little churn (the unscrupulous mutual fund distributors will not like me for this!!).
Neeraj asked, Do you think the market is going to have a correction in the near future?
Rahul Goel answers, frankly, we have no idea where the stock markets will be in the next few days or even months. we evaluate fundamentals and take a 3-year view.
sunilcapri asked, hello sir.pls advice the correct time to invest in mf/s
Rahul Goel answers, in our view it is very difficult to time your investment to perfection. the best is to invest in small amounts and regular intervals so that the cost of acquisition of the asset is averaged out.
sudhakar asked, 1) Is mutual fund is best or IPO is the best ? 2) Which mutual fund is the best for 1 year period ? 3) In mutual fund options Growth is best or divident is best ?
Rahul Goel answers, mutual funds are suited for those investors who wish to take exposire to the stock market by entrusting their monies to processional manager. in the case of IPOs its you who decides to take direct exposure. so depending on your level of expertise you should deicde which suits you best.
SivaShankar asked, Can I invest in DSPML Technology.Com Fund? How may years one should invest in SIP to achieve a good return?
Rahul Goel answers, rather than invest in a secotr fnud, we would recommend you invest in a diversfied equity fnuds. in a sector fund the fund manager does not have the flexibility to move out of the secctor in case the prospects turn bad (remember the tech meltdown). Have a minimum 3 year outlook.
Vani asked, Dear Sir, I have good returns on 2 funds, chola multi cap and flexi cap. I invested 5k and 10k respectively at NFO price which have grown to almost 9k and 18k. Should I sell them now?
Rahul Goel answers, everyone who has invested in equities has earned a good return. the overall markets have done well. you need to be sure iyou are invested in schemes which will deliver in the future - in terms of meeting your objectives.
mehraj123 asked, Rahul Ji, should one avoid investing in NFOs?
Rahul Goel answers, most NFOS are the result of an investor unfriednly scheme to garner aums at the cost of the investor!! the distributor likes NFOs because he makes big commissions.
tscrajan asked, HI Rahul, Can you suggest which is the best mMF in the market?
Rahul Goel answers, you will need to identify the fund which suits you best. one fund may be good for me, and it may be very bad for you.
hr asked, for a married 32 year person, what will be the asset allocation in terms of debt, equity, gold, real estate etc?
Rahul Goel answers, it is important to know your goals and objectives. having said that younger people tend of have higher risk appetites and therfore they have more exposure to risky asstes like stocks. but this is not always so. you will wind elderly people with large risk appetites!
rajnath asked, I want to invest 3000/- permonth for my daughter fo duration of 15 years which is best way to get good return in MFS
Rahul Goel answers, simple - when selecting the funds do your home work well. we at personalfn.com, when advising our clients, are very careful about this. most of our efforst are focussed on selectin gthe right schemes for our clients.
isibhai asked, hi,i'm NRI, i would like to know which is best fund to invest for my childern's furure, their age is 8 & 6. i want to invest monthly 1000 rs. each in SIP. another which's bank offer best homeloan rate for NRI. which's other best option to invest my money for 7 -10 yrs from now
Rahul Goel answers, opt for well managed diversified equity funds for your chidren for now. as they approach 15 yrs of age, you can town down the risk by investing in other asstes like debt. frankly, from a 10 year perspective, we think that if you invest ssmartly, the strock markets (or equity fundsa) will deliver you the most sttractive returns. of course you go through intermittent phases of bearish sentiment.
ajit asked, i have invested 36k in ELSS and 28k in insurance.I want to invest 36k more so that my investment equals to 1 lakh/year.Where should i put this 36k now?please advice
Rahul Goel answers, i am unable to guide you on this as i do not know anything baiout you - why are your investing; what are your objectives; how much risk can you take; where are your current assets invested. ...
rajnath asked, Rahul do you answer particular question?? I want to invest 3000/- permonth for my daughter fo duration of 15 years which is best way to get good return in MFS
Rahul Goel answers, in my viuew, if you can take risk in the near term, opt for a predomiantly equity portfolio for her. select only well managed diversified equity funds. you can have some balanced funds to give a flavour of debt. as she approaches her colllege years, derisk the portfolio, gradually.
echo1 asked, which diversified equity funds in your opinion are well managed ?
Rahul Goel answers, without naming the funds... those where teams manage the money and not star fund managers; where the interal processes are strong (personalfn analysts meets funds to assess this); where the track recoord especially in periods when the market is falling is good; there are many such factors. but if you approach this rationally it is not difficult to identify such funds.
ashok asked, Can you suggest any option better than bank fixed deposits for a horizon of 1 year. I would not like to risk my money in equity/stocks?
Rahul Goel answers, you can opt for what are called fixed maturity plans. these are relatibely low risk intruments where the return thouhg not guaranteed, is estimated in advance. take such a fund from a credible fund house.
amit.gb@rediffmail.com asked, I am a male 28 , married. My wife is dependant on me. Parents are not. How much Insurance i should have for myself. My liabilities are a flat of 12 lacs + 4 lacs for car and i do have a term insurance that covers this amount. Apart from this, how much should i cover. My Annual Income is 9,00000/-
Rahul Goel answers, you will need to calculate your human life value... at personalfn we look at this from a very difference perspectibve. if you wish you could use the calc on personlfn to get an answer for yoursel - http://www.personalfn.com/calc
Laki asked, Hi Rahul i think Varun could go for gold ETF
Rahul Goel answers, I am not a big fan of gold etfs. reasong being that there is an entry load and then there are annual sevice charges. given the amount of gold we need to own, we can buy physical gold (though not from banks which charge a 20% premium) and store it in our already existing bsank lockers... that in my view is much better!
vamsi asked, hello sir,i want to invest in a tax saving mutual fund for a maximum time period of 5 years, please suggest me the best tax saving mutual fund scheme
Rahul Goel answers, there are various types of tax saving mutusal funds - very aggressive, conservative etc. you will need to decide which suits you best. alternatively your finaical planner should be able to advise you.
sachu asked, is it best to do MF and Stocks simultaneously?
Rahul Goel answers, that will depend on how much time you have. if you can spend time researching stocks, then why not! invest in stocks. divide the money between funds and stocks in line with the time you can allocate to managing your own stock portfolio.
Vani asked, Hi! I want to start investing for this year's tax planning. Which tax saving funds can i consider? Should I go for SIP or lumpsum?
Rahul Goel answers, go for an sip if you wish to minimise the risk of mistimg the mrket. othersie do lump sums.
Shailesh asked, Please advise whether it is best bet to invest in equity div. mutual funds instead of PPF and FDs. My investment horizon is 5 yrs and more
Rahul Goel answers, these are very different asset classes and cannot be compared as such. if you are investing for 5 yesars, and can take risk, then invest a significantr portion in stocks. if you cannot take riskm then the option is fds and ppf. Thank you all for participating in the financial planning chat. Due to time constraints I am unable to take on more queries. Thank you.
Rahul Goel says, Thank you all for participating in the financial planning chat. Due to time constraints I am unable to take on more queries. Thank you.