Are you the one who doesn't understand mutual funds? Do numerous MF options baffle you? What are the best funds available? Which funds accrue maximum profits? 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:
Rahul Goel says, Good afternoon! Already lots of queries to discuss... let's get started!
john asked, Sir, Is amc diversification necessary even if some funds are performing well? I have funds in different schemes but all under one amc-iciciprudential. My funds are discovery, dynamic, emerging star, infrastructure, power and last equity/derivative wealth optimizer. Please review and advice.
Rahul Goel answers, at 2007-09-06 13:00:00john, hi. it is very necessary to diversify across different amcs. a personalfn client would tend to hold schemes from atleast 4/5 amcs. the reasons for this are not far too seek. the most basic being you eliminate the risk of being dependent on only one service provider. then again diversification is necessary as any one fund house in all probability will not have the best schemes in various categories. so, you need to opt for other fund houses too.
michael asked, Hello Rahul, Why is it that financial publications, advisors, experts, etc have different ways of rating mutual fund schemes and not a common methodology? How would you want a layman to rely on the recommendations? Please comment.
Rahul Goel answers, michael, hi. this is a very interesting question that you have asked. recently we came across a note written by morningstar, which is the pioneer in mutual fund ratings. in the note they themselves stated that ratings are not the final answer on a scheme! at personalfn, we have not rated schemes for precisely that reason. we select schemes based on a minimum criteria that need to be passed; post that we match the scheme to the client's need and profile. so one scheme may be very good for you, but not so good for me. so, i would sugget that you see the ratings but do not necessarily act on them blindfoldedly. you will still need the assistance of a planner/consultant to decide which scheme suits you best.
Amit asked, Which mutual funds or other financial instrument should i choose for retirement savings. I am 35 years old and lan to retire by 60.
Rahul Goel answers, amit, hi. assuming you have appetite for near term risk, you must have a predominantly equity fund portfolio. opt for the diversified equity funds; avoid sector funds. some monies can go into PPF and other low risk instruments; but this is a very small portion. for the mutual funds, you may consider funds like hdfc equity and fr flexicap. the best way to decide on which funds to invest is to spend time on identifying the right financial planner for yourself. he/she will then help you with constructing the portfolio.
NIL asked, HOW DO YOU RATE UPCOMING NFO OF ICICI - INDO ASIAN
Rahul Goel answers, hi, we are advising our clients to avoid investing in this issue. actually we at personalfn have been a little cautious of all these global funds which are being launched... for various reasons.
viral asked, hi rahul. i am 25 years n going to get married. what financial steps should i take for a better future of me and my family
Rahul Goel answers, viral, hi. many congratulations! well, there are two things you can do, from a very macro perspective. one, save as much as you can. and two, invest your savings very wisely. i know this seems simplistic, but then this is what is important when you are planning a secure future for your family. if you do not have the skill to manage your own money, get professional help.
prashant asked, Hi i am 32 yr old and want to invest in SIP should i go for it? Is it benificial for saving income tax?
Rahul Goel answers, prashant, hi. SIP is not an invesmtent avenue! its only a way of investing in one! so, what you should really be doing is identifying the mutual funds that you need to inevst in; and then doing an SIP for the purpose. if you have risk appetite, then some portion of your sec 80c limit could go into tax plan funds.
ryan asked, Mr. Rahul, I have following m.funds; dsp opportunity, fidelity equity, franklin flexicap, ft balance, hdfc equity, hdfc top 200, hdfc prudence, hsbc equity, hsbc opportunity, hsbc midcap, and reliance vision. Please give your topmost advice to minimize my funds.
Rahul Goel answers, ryan, hi. i think one way to start is to exit the sectoral/thematic funds.
jitendra asked, I want to invest 50K this yr in Mutual funds. can you suggest any good fund to invest?. I found some DSP-ML India T.I.G.E.R -RP (G),StanChart Premier Equity (G),JM Basic Fund (G).Can you please suggest on this fund? Is this right time to invest in this fund or wait for gud time
Rahul Goel answers, jitendra, hi. i think you can find schemes which offer a better investment opportunity out there. i think you should avoid sectoral/thematic funds for sure.
soumen asked, Sir, I plan to invest around 20,000 - 25,000 in MF's. Please suggest me some good mutual funds having tax benefits. Also, when is the right time to invest in them. Should, I wait for the sensex to come down? Thanks.
Rahul Goel answers, soumen, hi. when you say tax benefits are you referring to funds which fall under section 80c? if yes, then the tax saving funds we like are hdfc long term adv and fr india taxshield among others. opt for an sip as against trying to time the market. the sip option is sensible; the timing the market bit is very difficult if not impossible.
sipu asked, Sir,I want to invest 3to5year time fame which mutual fund is good and also i can get tax benifit from that.
Rahul Goel answers, sipu, hi. i have already discussed the scheme names in my earlier relpy. invest only that much in such funds as your asset allocation demands.
santoshnk asked, Hi Rahul, Query is regarding Long term capital gain, i have a site which bought some 3.5 yrs back i want to sell it and buy another site/apartment where i am planning to construct house and stay there. So capital gain from selling the site will be tax free?
Rahul Goel answers, santosh, hi. i would think so. but best is to get an opinion from a tax consultant.
MArk asked, My aim is to build wealth - short term goal - 3 years - 30 lakhs - I save Rs 60K per month. My Asset Allocation per month is Arbitrage fund - 33k, Equity MF SIP - 16K, Shares - 11K. Every year I hope to increase savings by 10%. Long term goal - 8 years - 1 crore. Q1) Am I on the right track, Q2) is the allocation too conservative Q3) I have no property - If i buy it will be for my dwelling. Should i invest in one?
Rahul Goel answers, mark, hi. if you were to invest rs 60,000 pm at about 16/17% pa you would meet your goal. but then will an arbitrage fund give you such a return? unlikely. i suggest you focus on your 8 yr goal and change the allocation to include more equity funds. also, property for dwelling is a need; ultimately you need to buy it in any case. but i do not think you should buy property from an investment purpose. too many issues to deal with - illiquidity, maintenance costs.
MArk asked, Arbitrage Funds - Is this a good option when compared to debt funds for capital protection and decent returns?
Rahul Goel answers, arbitrage funds are marketed to investors with a view that they are risk free. well, they are not. before committing monies to such funds pl understand implications very well.
JATZ asked, What would be the good MFs to invest in for a 20000 to 30000 range for a period of 3 years. Do also suggest what would be a good portfolio split of th MFs to select at this stage (Growth, Bonus, Dividend etc)
Rahul Goel answers, jatz, hi. do you have an appetite for risk? what is the kind of returns you are expecting? most importantly - why are you investing - the investment objective? without this info it is difficult to guide you. moreover, if you goal is to accumulate monies, go in for the growth option.
venu asked, I would like to start SIP with 10K per month. Objective is Children Education & Marriage. Investment Duration is 7 to 10 years. I got advise from one financial planner to invest 2.5K each in HDFC Equity, Fidelity Equity, Frankin Flexicap & DSPML Opportunity through SIP. Are these the best suited funds? I expect return of 20% pa. Please advise.
Rahul Goel answers, venu, hi. the schemes suggested to you are all very good. go ahead! i suggest you temper down the expectation of returns to about 15% pa.
Amit asked, Hello Sir, I want to invest for my son's education and other expenses. He is 3 years old. Which PLAN or mutual funds should i choose.
Rahul Goel answers, amit, hi. opt for the regular diversified funds. do not go in for ulips to start with; and do not opt for the child mutual funds. you can consider ulips at a later stage. if you wish to secure your child's future, take term insurance for yourself.
dips asked, Sir, i make 10 lacs per annum. my wife makes 3 lacs per annum. total family income is 13 lacs. i have an insurance policy for which i am paying 42,000 premium per annum. can you please suggest where should i invest and how do i do my financial planning?
Rahul Goel answers, hi. do you have any objective in mind? once you are clear on what you want to achieve with your money, then planning is a lot easier. my recommendation is that you find yourself an honest financial planner who will help you with this. invest only once you have finalised your plan.
bik asked, Good afternoon , When and How to buy MF?
Rahul Goel answers, there are a lot of distributors out there who can help you invst. but if you also need guidance on where to inevst etc, then choice is limited. ask your friends who they use and whether they are happy with the service? or, simply get in touch with personalfn on info@personalfn.com! :-)
rahul asked, Hi, I have invested in around 20 funds. Is this a good way to invest or should the investments be limited to only around 5-8 funds?
Rahul Goel answers, rahul, hi. twenty funds is just too many. in a portfolio, for a need, a max of six schemes should do. time for a review...
MArk asked, What are the reasons Financial planners advice against having many funds - Other than managing the very many funds.
Rahul Goel answers, one reason you invest in a fund is because it is diversified in its investments. by holding several schemes you are diversified in the holdings and also the style of managing money. by holding many schemes, you probably have schemes which own most of the liquid stocks in the stock markets; also the several styles of managing money. net result probably will be you will earn a return which is in line with the index... remember more diversification, up to a point, effectively leads to lower risk and lower returns.
pawan asked, blocking a money in mutualfund is better or take a home loan and buy house is better??
Rahul Goel answers, pawan, hi. the answer to this question would depend on your risk appetite. if you are willing to take the risk that your investment will earn more than the interest rate on your home loan, then go for it. else, opt to buy the house outright.
sangita asked, i wanted to know whether investing monthly in direct equity is better than investing monthly in mf
Rahul Goel answers, sangita, hi. if you have about 3 - 5 hours every day to study the stock markets and the companies to inevst in, then go for direct equity. if not, go in for mutual funds.
ARUNAVO asked, I AM HAVING FOLLOWING MF'S/SIP'S LIKE-1.RELIANCE LONG TERM EQUITY FUND-GROWTH OPTION 2.PRINCIPAL LONG TERM EQUITY FUND - 03 YEARS PLANN-SERIES-1-FEB'07 3. OUOFG HSBC -UNIQUE OPPURTUNITIES FUND - GROWTH 4. TSIPIG TATA SIP FUND SCHEME -I GROWTH. PLEASE TELL ME THE PROSPECT OF THOSE AND WHETHER I SHOULD HOLD THESE.
Rahul Goel answers, hi, it seems your agent has got you to invest in nfos which hit the market in recent times. since some of these are close ended schemes you will not be able to exit. for the others, before you act it may be better to get a financial planner who can guide you on this. be very careful the next time your current distributor comes to you with an investment idea.
Tuhin asked, Hi Rahul. I am looking to invest approx 1 Lac in ELSS tp get Tax exemption under Sec 80C. I have no dependents and prepared to take risk. Kindly siggest the MF under this scheme. Thanks!!!
Rahul Goel answers, tuhin, hi. like i mentioned earlier consider schemes like hdfc long term adv and fr india taxshield. also, invest the monies so that you not only save tax but meet other objectives as well.
Sudhan asked, Which it better insurance option - Term or ULIP?
Rahul Goel answers, sudhan, hi. the best option probably is term insurance+mutual fund instead of a ulip.
prash asked, Hello fro a 30yr old man whose income is 7lacs anum having a kid 2 yrs and liability of home and car loan (12k + 10k EMI) what portfolio (stocks + MF + FDs + PPF+ LIC) u will advice?
Rahul Goel answers, prash, hi. for the portfolio you build for your child, opt predominantly for equity funds; for your retirement plan too, you need to be aggressive. have some flavour of debt; keep some money liquid for short term needs. ensure you have adequate term insurance to secure your family's future.
Nitin asked, HI Rahul, Though people say therse isnt any, What is the realtion ship between strock prices and NAV's of Mutual fund. Also IS IT CORRECT TO BUY FUNDS WHEN THERE NAV IS LOW, Just like STOCKS
Rahul Goel answers, nitin, hi. when stock prices of companies in which a mutual fund is invested fall, the nav of the fund will also fall. however, a low or a high nav has no significance at all in our view. one should invest in a fund depending on various factors but not the nav.
Umesh asked, can i Invest in DSPM Equity Fund or Tiger Fund Pleae suggest
Rahul Goel answers, umesh, hi. its better to be in a diversified fund like dsp m equity than to invest in a thematic fund like tiger.
gopal asked, is there any IPO of current ELSS mutual fund
Rahul Goel answers, gopal, hi. why is it that you wish to invest in the ipo/nfo stage only? go in for existing schemes .... it will be a much wiser decision.
Pavan asked, I am going to start SIP in HDFC Equity, FT FlexiCap, Reliance Growth, DSPML TIGER and SBI GLobal. I want to continue it for 1 year and want to withdraw after 3 years. Your opinion please.
Rahul Goel answers, pavan, hi. i think you could do away with the sectoral/thematic funds for sure.
RahulKhanna asked, Hi Rahul. I am 28, single earning 10+ lacs pa. My monthly expenses are 20,000 & I am saving around 42000-45,000 per month. I want to invest for my retirement at age 50 for which I have calculated I would need 2.5 crores considering inflation of 6.5% pre & post retirement. How much should I invest in MF's monthly to make 2.5 crores in another 22 years ? Also have I assumed a good inflation rate ? I am currently investing around 11000-12000 per month in in funds like HDFC Equity, HDFC Prudence, Sundaram Select Midcap, Reliance Growth, Magnum Global, Reliance Vision. Should I look at any fund to invest or increase investments in the same funds ? Also, I have invested in a property which has grown 2.5 times in value to around 45 lacs. I have a loan outstanding for this of 8 lacs. My EMI & rent received from property are nearly equal. I have a ULIP & other current investments value around 3 lacs.
Rahul Goel answers, rahul, hi. if you wish to accumulate rs 2.5 cr in 22 yrs, then you need to invest about rs 60,000 pm, at a return of 15% pa - this is assuming you have not saved towards this plan already. so i think you will need rework your plan a bit. but if you could your property towards this plan, then you do not need to inevst any more monies!
vasu asked, mr.rahul pls suggest me 3 mutul fund for a return of around 25%
Rahul Goel answers, vasu, hi. in our view a realistic estimate of return is 15% from risky assets like stocks
sansan asked, Sir, How is gold as an investment option? Should one opt for it after having set aside sufficient % of wealth on Equities?
Rahul Goel answers, hi. gold should be purchased for purpose of diversification only; we advise our clients at personalfn to have about 5% of assets in gold.
Darshan_N asked, Hi Sir, last year i invested in ELLS MF (HDFC Tax saver). I need to invest around Rs.45000/- as a tax saving for this year. Remaining I am already investing in LIC (Jeevan Anand, Rs.2308 premium/month) and PF etc.. Can you please let me know where i can invest this time, MF or Fixed Deposit? If MF, which is the good?
Rahul Goel answers, darshan, hi. i have already mentioned the schemes earlier. i suggest you go in for the six month sip option starting this month.
Vaishali asked, Hi Rahul, how does personalfn create portfolios for the customers? Does a senior/analyst team get involved in each case or is it left to the sales person?
Rahul Goel answers, vaishali, hi. personalfn has a core team of analysts who design portfolios. the investment consultant that meets you is able to customise the same for your profile. but yes, at every stage, for every plan, a senior member is involved. also, we do not have sales people in personalfn. we also do not have targets to sell so and so amount of funds this day or next day or next week etc. we are in the business of helping our clients meet their objectives.
Invest asked, Hello, once one buys some mutual fund in some scheme, how do we know that AMC is not taxing it too much and how to ensure that AMC is not taking more profit from that scheme?
Rahul Goel answers, hi. you need to understand how mutual funds work. and this you should have done prior to investing. but rest easy, the two points that you have raised is somethign that does not happen.
rajeshcjain asked, Which are the best children schemes, which can provide adequate funds for education or marraige or any future business venture which the child should like to venture ? ?
Rahul Goel answers, rajesh, hi. i suggest you opt for regular investment proucts like diversified funds. put some money in ppf. and take term insurance for yourself.. to secure your family's future.
Amit asked, Thanks Rahul, Where do i get a good financial planner in Bangalore also i would like to invest in equity please help.
Rahul Goel answers, personalfn does have an office in bangalore. you can write to them at info@personalfn.com. we will be delighted to have you as our client!
afaf asked, How will u rate the performance of following schemes. HDFC Equity fund( Growth), DSP ML ( Opp Fund), FEdility Equit yFund (Growth). I have SIP signed up all these schemes should I continue investing in the same. I am thinking of withdrawing the money only after 3 years from now. Thanks
Rahul Goel answers, all the three in our view are very good schemes.
RAHULGUPTA asked, *************** HI rahul, IS IT BETTER TO INVEST IN ULIP AND PAY HEAVY ADMINISTRATIVE TAX OR INVEST IN MUTUAL FUND***************
Rahul Goel answers, rahul, hi. i would prefer that one go in for a term insurance + mutual fund investment than to go for a ULIP.
Rampal asked, What should be the approach of Financial planner?Clinet needbase?How can one be sure about his advices
Rahul Goel answers, best way to evaluate a financial planner is to meet/talk to a couple of his existing clients. then of course in your meetings with him evaluate his views on insurance (is he pushing ulips?) and mutual funds (is he pushing nfos?). if he is pushing nfos and ulips, then you need to look out for another planner perhaps!
Rahul Goel says, Thank you all for participating in this discussion. See you all next week!
Chat with Rahul every week! To read more transcripts, click here!
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