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?
Mutual fund expert Rahul Goel spoke to readers during an hour-long chat on Thursday. Here is the transcript:
Rahul Goel says, Good afternoon! let's start!
Moneysh asked, Hi Rahul !! what advantages actively managed funds have over passiveley managed funds ? can index funds perform better in long term ?
Rahul Goel answers, at 2007-11-01 13:00:21hi. this is a very pertinent question in present times. in the last couple of years, the index, which has been driven by a handful of stocks, has outperformed most well-managed actively managed funds. this is due to the fact that these funds do not own those index drivers in the same proportion as in the index. however, our view at Personalfn is that over the long term, as is true in the last 10 - 15 yrs, actively managed funds will outperform the index funds. in india a smart fund manager can still find unidentified opportunities. this will ensure that there will be an outperformance.
Moneysh asked, How ETFs are doing ? which are good Gold ETF in your opinion?
Rahul Goel answers, ETFs are relatively new investment opportunities for investors. however, when it comes to gold etfs, our view is not clear cut... a lot depends on you! yes, that's right. we find that for most peple it may be wise to simply buy pure gold which is a one time expense as compared to an etf which has ongoing expenses. but this is just one reason... if you wish to read in more details on this, please visit www.personalfn.com/gold
Amit asked, I want to start investing in Stocks now....how to start ?
Rahul Goel answers, amit, hi. if you are starting then you need to be very careful. remember, the stock markets are a long term investment opportunity... they are not a gambling den if you will! so, do your home work, select your stocks after due study and maybe also seek professional advice. you may want to read up the tutorials on www.equitymaster.com to learn more about investing in the stock markets.
Tushar Tanzania asked, hi. My Monthly Income is Rs55000. Out of it, Rs.25000 are being invested in MFs,Recurring & LIC policies.Waht do you advise on the remaining part. My Target is to buy a flat worth rs.30lacs after 3 years
Rahul Goel answers, tushar, hi. you need to be sure of a couple of things here. one, the allocation between mutual funds and recurring depposits is in line with your needs. two, the lic policies cover you and your family adequately. three, are the funds and deposits you are invested in best for you? post that you should decide about where to put more money! in any case if you are looking at buying propety in a couple of years from now, then its best you take on moderate risk at best. a pure equities portfolio may be very volatile during this relatively short period.
ravi asked, Hi rahul I have invested in Reliance Diversified Power Sector Fund - Growth mf can u plz tell me abt this fund & its feuter & also suggest me few mf
Rahul Goel answers, ravi, hi. at personalfn we do not even suggest to our clients that they invest in sector funds. we believe such funds carry very high risk.... and the rewards over the long term are not really commensurate. remember the tech funds? the pharma funds? its best to be in well managed diversified equity funds instead, which in any case may have invested in some power stocks.
Tushar Tanzania asked, Hi Rahul. I am having Rs 3 Lakhs lying idle in my s.b.account. What should i do. I prefer equities more than other instruments.Any Particular stocks to invest in for a period of 3years waiting period
Rahul Goel answers, hi. like i suggested earlier, first we need to understand exactly where you are invested. only then should we commit new monies. if money is lying idle in a savings bank account, tranfer it to a liquid plus fund... you will make a spread of about 4 - 5% without much risk!
Ninad asked, How to decide the best Mf`s?what are the criteria`s that has to be looked at?
Rahul Goel answers, ninad, hi. there are many things to look at. but broadly look at the AMC and the fund management team. then you can look at expense ratio, the turnover ratio and ofcourse performance of the fund in good times and bad vis-a-vis the peers and benchmark indices. once that criteria is met, then you need to be sure that the fund is "best for you". if you wish to read more about selecting funds, you can download the free mutual fund guide from personalfn here - www.personalfn.com/investment/ms
rahul asked, Hi I have around 2 lacs to be invested in mutual funds. I had invested them in the NFO of reliance equity growth and sold it at NAV of 16.25
Rahul Goel answers, hi. you have made money on an investment. but evaluate it from this perspective... when you invested in the fund you paid an entry load. luckily for you the fund has delivered a return. now you have redeemed, and probably paid a small exit load as well. and now, you will again inevst in a new fund, which will charge you an entry load... and this process will carry on!! guess who is making the money - your distributor!!! best would have been if you inevsted in the fund that was best for you in the first place!
brayn asked, Which are the best tax saver mfs
Rahul Goel answers, hi. we prefer funds like fr india taxshield and hdfc taxsaver. but should you be investing in equities? tax planning is a part of overall fnancial planing... be sure not to forget that!
Bruton asked, Hi - I have just started working and my Salary Gross is 9 Lacs per annum. Which means my monthly works up to be 74,500. My expenses work out to be 20K per month. How and where can I invest the balance 55,000 to save on my taxes. I am new to investments. Please help...
Rahul Goel answers, bruton, hi. well, to save tax, you can take life insurance (pure term only ofcourse), invest in tax saving mutual funds and maybe some in eligible post office schemes. then of course the EPF that is deducted from your salary forms a part of this. the ratio of how this money is to be split will depend on your long term goals and appetite for risk. since you are starting off, the best for you may be to employ the services of an honest finanical planner.
brayn asked, I am in UK and saving 1Lacks INR per month so could you please let me know that should I hold this amt in the POnd currency or should I immediately convert it to INR and invest in some good mfs in india for long term prospective ?
Rahul Goel answers, bryan, hi. whether you wish to convert the currency or not will in our view depend on your long term goals. if you wish to settle in india, then you might as well convert now. on the other hand, if you are only looking for an investment opportunity, you may want to convert small portions over a period of time. you may want to read our nri guide (free), which is available on personalfn.
Nand asked, Hi Rahul, 3 years ago I invested in Birla Sun Life's ULIP scheme based on some really glib talk and persuasion by my Citibank Relationship Manager. Now, I dont see any major benefits. The entry load and monthly management fees are very high. My investment in the 3 ULIPs total Rs.15 lakhs so far. Do you it is wise to pull out of it and invest in MFs?
Rahul Goel answers, nand, hi. are you sure you can pull out your money? if you can, you may want to do that but remember the cost will be prohibitive. the other alternative is that you do not pay more premium and let the policy fund itself. do not forget to write a letter to the MD of the bank tell him how you have been misguided, if at all.
sagar asked, my gross salary is 4 lacs where should i invest money
Rahul Goel answers, sagar, hi. from your query i am not able to gather any meaningful information apart from the fact that you want to invest! suggest you send in more details or alternatively employ the services of an honest financial planner...
sudhir asked, Rahul, 1) i am having Rs 1 Lakhs lying idle in my account and i have reviewed market condition for last 15 days, it is very much up and down. Could you please advice me which mutual fund is better for me in such market condition. 2) I want to open SIP, which is the most sutable SIP with good returns.
Rahul Goel answers, sudhir, hi. first lets take the SIP part. if you have a 3-yr plus investment horizon, then you should consider having a portfolio of 5/6 well managed diversified equity funds like hdfc equity and fr india flexicap. with regards to the monies lying in your bank account, you may want to invest it in line with a need. if you have a need three years down the line, invest in the equity funds you select. else, simply put the money in liquid plus funds or maybe even FMPs.
narender asked, hi rahul! I wanna invest Rs.5000/month in a SIP. Which one is gud 4 me?
Rahul Goel answers, narender, hi. i have already mentioned the scheme names in an earlier query. what you need to think over is whether you are saving enough to meet your long term goals?!
prithvi asked, Hello Rahul ! I earn Rs 8000 pm. I wanto to start investing in MFs through SIP for 3-5 years. I have chosen 2 funds- SBI Magnum Global(Growth) and SBI Magnum Bluechip (Growth). I m planning to start with SIP of Rs 500 each and may increase the SIP depending on the money i manage to save each month. Is this a right choice? Approximately What % of returns should i expect after 5 yrs?
Rahul Goel answers, prithvi, hi. if you were a client of personalfn, we would not have you invest in either of the funds that have been mentioned by you! the reason is that we look beyond numbers when it comes to selecting mutual funds. in terms of returns a well managed diversified equity fund should be able to return 15% pa over the next 3 - 5 yrs.
vinod asked, I am looking for some tax saving fund.s....is this right time to enter ? which one to select? i need to invest 25k
Rahul Goel answers, vinod, hi. well the markets are at all time highs and it appears that this may not be the right time to put in a lump sum. what you could do is invest the monies in 5 equal installments over the next couple of months. this will average out your cost of investment and reduc the risk you are otherwise exposed to.
BHARGAV asked, Hi, i am 24 years old,single and i earn Rs 40,000
per month. Please suggest me an investment plan.
Rahul Goel answers, bhargav, hi. good that you wish to start early! assuming you have appetite for risk, you should put money in well managed diversified equity funds for long tenures.... invest via the SIP route. avoid nfos. avoid global funds launched so far. avoid thematic and sector funds. the simple diversified funds will work best for you.
shyam asked, Hi Rahul, i want to invest 2 lacs in mututal funds now for 8 months is it the right time to invest in the market now as market is at all time high and is their any chances of Market going up further ? and also suggest some good MF Scheme
Rahul Goel answers, shyam, hi. if you have an 8 month horizon, in our view, you should not be investing in the stock markets! best for you would be FMPs... whcih are close ended debt funds.
shiva asked, Hi, I am NRI, 35 M working in Gulf having savings of abt 25 Lacs per annum. What should be ideal investment ratio in Equity. MF, FD, real estate etc?
Rahul Goel answers, shiva, hi. the allocation would depend a lot on your needs and profile. maybe you can read our investment guide for nris to get a sense of the opportunities that are available in india for nris... www.personalfn.com/investment/ms
manoj asked, Hi rahul,My family have invested 4 lakhs in Equity funds of ULIPS of diffrent insurance copmanies.how you compare it with mutual funds?what returns we should expect in equity fund for next five years?
Rahul Goel answers, manoj, hi. in most instances a combination of mutual funds and term insurance will work better as compareed to a ULIP. as mentioned earlier, a well managed diversified equity fund should be able to deliver 15% pa over the next 3 - 5 yrs. but this return is not likely to be spread evenly... the average will be 15% pa.
Oka asked, Whats an SIP? How do I go about investing in an SIP?
Rahul Goel answers, oka, hi. an sip, a systematic investmetn plan, is a way of investing in a desired mutual fund scheme. at a fixed day of the month, a fixed amount is transferred from your bank to the mutual fund scheme you have done an sip for. so over time, you invest the same amount of money every month in a scheme... and at the end of it you have an investment which is acquired at a "average" cost, which over time tends to be beneficial to you. it also dilutes the risk of mistiming the market. how to do an sip? well select the mutual fund schemes first! then you can do an sip for them.
prash asked, Hi i am 30yrs old kindly suggest me a good retirement policy
Rahul Goel answers, prash, hi. rather than taking a retirement policy, your priority shoudl be to take a term insurance plan for 30 yrs. with regards to retirement, start setting aside money in mutual funds and other investment avenues. this will work best for you!
dhiren asked, Dear Sir, I am 39 yrs old. I am having a 10 yr old son & a 8 yr old daughter. My present earning is 5 lacs. I have taken hsg. loan from bank. Present O/s is 2 lacs. I want to repay the loan at the earliest. My investment in shares is 8 lacs (mkt value), cost is 5 lacs. My investment in Mutual fund is 2 lacs (m.v.), cost is 1.30 lacs. My investment in bank fd is 2 lacs. My PPF balance is 1.50 Lacs. I am investing 5,000/- p.m. in bank R/D since last 1 year. I am paying insurance premium of Rs. 25,000/-p.a. (no term policy) Total Cover 5 Lacs Whether I am going on right track of investment or is there any change required ? Please advice.
Rahul Goel answers, dhiren, hi. firstly i am not sure you should be putting money into a deposit (assumption is that you have EPF, apart from the PPF - both debt). second, since you have more shares than funds, are you able to devote several hours a day to tracking your stocks? if not, this could be a great time to book profits and move into well managed diversified equity funds. third, are you invested in mutual funds which are best for you? your elder child is about 6/7 yrs from college... this is a good time frame for investing in instruments like equity funds. avoid investing more in insurance, unless you want to take a term policy.
vg_pal asked, HI Rahul, I have a requirement of Rs 1,00,000 with-in 1-2 years for my marriage. What is the amount I need to invest and how to diversify it.
Rahul Goel answers, hi. since the time you need the money in is very short, you will probably need to accumulate the monies in a deposit... since the return is going to be about 5 - 6 % post tax, you will probably need to save almost the entire amount you need.
metal asked, which is best investment option for long term Mutual funds or investment in land ? and which can give better return over 4 to 5 years. Thanks
Rahul Goel answers, hi. both are different asset classes; other than that when you invest in a mutual fund your holding is diversified... in case of land you will have a concentration risk unless you are planning on buying land across the country! on a risk adjusted basis, mutual funds may be a better option
ganeshcjaiswal asked, hi rahul i am investing through sip in icici dynamic and sbi magnum global fund for 5 years. what are the prospects of these funds
Rahul Goel answers, ganesh, hi. if you were a client of personalfn, you would not be putting money into these funds... what will suit you best? for that we will need to understand your profile, needs and expectations better.
Akash asked, We are already notcing Sensex at all times high......Do we still expect growth with mutual funds and appro at what % annually.
Rahul Goel answers, akash, hi. it may be a good idea to ignore the index level as it is being driven by only a handful of stocks. as mentioned earlier we think the long term return is expected to be about 15% pa... but this is going to be an average return... there will be years when performance will be better or worse.
sudhansu asked, this is sudhansu,working in a mnc in bhubaneswar,orissa... i want to invest 25,000 per anum.(it may increase subsequentley per month) to become corepati, and it takes in an around 25-30 years, but i dont know where to invest and how to in vest? plz tel me..
Rahul Goel answers, sudhanshu, hi. as per my calculations you need to set aside only about 15,000 pm in assets yielding 15% pa to achieve an inflation adjusted goal of rs 1 cr in twenty five years. since the tenure is long, best would be a portfolio of diversified equity funds. a smaller portion could be allocated to real estate and precious metals.
Sam asked, Does it make sense to buy into a MF in a rising market, especially if it peaking and volatile? If yes, what do I need to evaluate when choosing?
Rahul Goel answers, sam, hi. i have just replied to a query dealing with the index... earlier i have replied to a query on what to look for in a fund before you commit monies to it. pl see in the transcript.
Rookie asked, Rahulright now there are no long term capital gains taxes in equity oriented MFs. How long do you think the govt. is going to keep that rule.
Rahul Goel answers, well, i think its an exercise in futility to predict what our politicians can come up with!
rkrawalca asked, hi sir, whether this is right time to enter in the market for another six months horizen specially in IT sector?
Rahul Goel answers, hi. if you have a six month horizon, you should be invested in a deposit or an FMP... not in the stock market!
rkrawalca asked, hi sir, whether this is right time to enter in the market for another six months horizen specially in IT sector?
Rahul Goel answers, hi. if you have a six month horizon, you should be invested in a deposit or an FMP... not in the stock market!
Kamal asked, Hi Rahul, Can you advice me which is the best available ULIP Fund available for investing for a long term (Say 10yrs) purpose returns? The reason I wanted to go for ULIP, is wanted a part to be covered for insurance too .. let me know your thoughts on this..
Rahul Goel answers, kamal, hi. it may be best that you do not mix investment and insurance to begin with. suggest you take the extra effort and go in for term plan on one hand, and equity funds on the other.
Rookie asked, Do you think there is a chance of a short term correction in the market... for long term players to get it ?
Rahul Goel answers, hi. personalfn has no short term view on the market. however, we believe that the nature of stock markets is such, that 20% corrections can happen any time.
horse asked, Hi Rahul, I have invested 50k in HDFC Equity (D), 50k in Fidelity Tax Adv (G), wud like to know if I continue SIP so that investments in both touch 2lakhs each?
Rahul Goel answers, hi. both are well managed funds in our view... but you may want to own 5/6 funds in total... having such a concentrated portfolio carries higher risk.
khalid asked, Hi Rahul.... i have ivested in Tata Capital Builder Fund during NFO. They send me my holding details by email as well as by post. Afterwards its been more than a year i didnt get my statement by any means. What should i have to do know? My status is of NRI? Please suggest?
Rahul Goel answers, khalid, hi. try this... send a letter/email to the AMC and mark a copy to AMFI and Sebi. it will work!
Dan asked, Hi - I am a 52 years and am planning for retirement soon. I do have substantial savings. But i would like to have some expert advice as to what mutual funds etc i should invest in to get a regular income of atleast 30,000 per month?
Rahul Goel answers, dan, hi. well, i think this is a good time to lock in money to generate fixed monthly returns... if you want personalfn to handhold you in this process, pl write in to us at info@personalfn.com with your contact details.
megastar asked, is nfo better or existing scheme better for new investors ?
Rahul Goel answers, hi. most of the nfos are marketing gimmicks to mobilise more aum. best is to avoid them. go in for well managed existing diversified equity funds.
Rahul Goel says, Thank you for participating in the discussion! See you all next week!
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