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?
In an hour-long chat on rediff.com on Thursday, personal finance expert Rahul Goel replied to many such readers' queries. Here is the transcript:
Rahul Goel says, Good afternoon! Welcome to the discussion on financial planning! Let's start!
uday asked, i have Rs.10000 and i wants to invest this money in Mutual Funds. which fund gives me good return. risk factor is no limit.
Rahul Goel answers, at 2008-02-14 12:55:54uday, hi. so you have appetite for a lot of risk. that's good. if this can be complemented by an investment horizon that is atleast 3 to 5 years, then you should inevst in a portfolio consisting predominantly of diversified equity funds like franklin flexicap and hdfc equity. having said that you need to ensure that your overall asset allocation is in line with your long term needs.
rrr asked, Hi Rahul, which tax saver NFO is best for now? SMI Tax Advantage series 1 or LOTUS AGILE TAX FUND.
Rahul Goel answers, hi. why invest in an NFO??!! in our view, its best that you avoid them. opt for existing tax saving funds which are well managed and have good track records.
reejit asked, I have invested 2000/-pm SIP each in DSPML TIGER, Reliance Diversified Power, TATA Infrastructure funds and also 30000/- one time in Reliance Natural Resources NFO, 30000/- per annum in ICICI LifeTime Super pension scheme as a Tax saving instrument, 20000/- one time in Franklin India Taxshield. Please suggest if my selection is ok, if not I can only change the SIP in the same fund house.Please advice.
Rahul Goel answers, reejit, hi. for one, the funds you own are all thematic/sectoral. then you have a tax saving funds an a ULIP. for me to be able to tell you what is best for you, i need to understand a lot more about you... but having said that, on a stand alone basis you can definitely improve the portfolio a lot. to begin with, rid yourself of sectoral/thematic funds... opt for well managed diversified equity funds instead.
Malini asked, Hi Rahul - I can invest around 50K per month. Any suggestions so that I get optimum returns. I also have around 30 lakhs in various PO schemes. Is it advisable to break these invt and invest in a house/flat?
Rahul Goel answers, malini, hi. you should buy only that much property as is essential for your own use and/or inheritance. avoid investing in property, especially in present times. you have money in PO... is it because you are risk averse?? if yes, then a couple of alternatives you can consider are MIPs and FMPs, both types of mutual fund schemes which could appeal to you. but if you have appetite for risk, and needs which are far out in the future, then you definitely need to take a re-look at your asset alliocation.
vaishnavsantosh@rediffmail.com asked, Hi, Rahul Sir, I want to invest Rs. 1000000/- kindly advise where I supposed to invest that amount and how? Regards
Rahul Goel answers, santosh, hi. where you should invest will depend on your needs, tenure of investment, risk appetite etc etc. you should employ the services of an honest financial planner to guide you with this. in the meantime do not let your money idle away... put it in a low risk liquid plus fund.
vishnu asked, pleas will u suggest me to invest money in mutual fund, and get good return. i want to have rs. 1 crore in end of 2020, so, how much i have to invest monthly to get that much amount at that time.
Rahul Goel answers, vishnu,hi. assuming inflation at 5% and a normalised return of 15% pa, you will need to set aside rs 50,000 per month for the next 12 yrs. if you however do not want to adjust for inflation, then ofcourse the number will be a lot lower ar about rs 26,000.
mayankgr asked, hi rahul, i have already invested in mutual Funds like Reliance Power Diversified , JM Basic , Sundaram CAPEX, DSPML Tiger , ICICI Pru Infra . Currently I have lost 20% of my money. Is my investment is OK. or should i invest more to get good returns now as it may take lot of time to come in +ves.
Rahul Goel answers, mayank, hi. you have put all your money in sectoral/thematic funds... in my view, this is not OK! its time you had a serious discussion with whoever has been advising you on your inevstments...
mayankgr asked, hi, I need to invest money so that i can get good returns in short term say 6 months. Should i invest in Mutual funds or in Stocks . Plz tell me some good stocks and mutual funds so that i can get good returns in short term. Thank you
Rahul Goel answers, mayank, hi. if you have a six month horizon, stick to bank deposits and liquid plus funds. do not invest in stocks and equity oriented funds!
Ramav asked, I heard that long-term gains from non-ELSS funds are Tax-free. Is that true?
Rahul Goel answers, ramav, hi. the long term capital gains from equity funds are indeed tax-free.
Anand asked, I want to invest 25000 in tax saving MF. Which fund would you suggest?... Thanks
Rahul Goel answers, anand, hi. consider funds like franklin india tax shield.
Jose asked, Hi Rahul, Currently I can spend Rs.20,000 every month towards investments & interested in long term plans.Pls suggest a suitable protfolio within my limts which should also fetch me good returns in the long run.
Rahul Goel answers, jose, hi. you should have about5/6 equity oriented sschemes in your portfolio. all diversified; maybe a max of 10% can be allocated to a mid cap fund. look out for schemes which are managed by credible teams of fund managers and which have a good track record in bear / falling markets. your advisor should be able to help you build such a portfolio.
Deepak asked, I am salaried CTC 15 lacs, house loan of 15 lacs pending..investing 25K in mutual funds via SIP per month...insurance cover of 10 lacs...what all I need to do for financial planning from your point of view. I am 32 yrs old, married, 1 kid. Thanks
Rahul Goel answers, deepak, hi. first, be sure that the money you are investing in funds is sufficient to provide for your immediate goal - child's education. and then ensure that you are invested in schemes best suited to you. you should also start planning for your retirement... and ofcourse, you need a lot more insurance; term insurance that is. not ulips.
Padma asked, Is it wise to invest in PPF in early stage or when nearing retirement(as old age requires income with safety for capital)?
Rahul Goel answers, padma, hi. the ppf is a very popular investment tool. my view is that if you are already contributing to a governement scheme via EPF etc, then you need not mandatorily invest in PPF. the reason being that in PPF the tenure is long and the return is not fixed... it changes every year. so you may put money in today thinking you will get 8% pa.. but in a couple of years thagt return may be lower or higher.. either ways the uncertainty with regrds to returns is high in my view. the ppf is a great scheme... but be sure it fits into your asset allocation. if you need is 5 yrs from now, then there is no point in putting money in a PPF account which matures in 10 yrs from now...
aryaumesh asked, Hi rahul, currently am getting net pay of 30k and i am married and have one kid. currently am able to save 5K which is invested into SIP. I need to know what percentage of salary to be required to be financial strong at the time of retirement. currently am of 32 yrs.
Rahul Goel answers, hi. assuming your kid goes to college 15 yrs from now and assuming that in present times it takes about rs 20 lacs (graduation and post graduation); to provide for education alone you need to set aside rs 13,000 pm in assets earning you 15% pa!! i suggest what you do is save as much as you can; and as your savings grow you make up for this deficit over time. the idea is to start now; over time all will fall in line.
vsnurdy asked, hai sir. this is vishnu.i'm going to start working from july.i'll be getting nearly 30,000/month. As i'm new to investing where do u suggest me to invest my money. i want the returns in 3 years as i'm planning a business.
Rahul Goel answers, vishnu, hi. well, before investing a single rupee, be sure to educate yourself on money matters... i suggest you read the money simplified guides on www.personalfn.com. and the other important thing is that you should employ the servcies of an honest financial planner.
IdleInvestor asked, Hi Rahul, I have 3 questions relating to investment. 1) What are the best mutual funds to buy-in with a long term perspective of 5-7 yrs in the current market conditions. 2) What is the right price to buy Reliance Power now with investment horizon of 5 yrs, and what is its current P/E? 3) What is the additional benefit that I get by doing SIP every month rather than invest every month when I have money and don't when no money.
Rahul Goel answers, hi. the answers to your question. 1. consider funds like franklin flexicap and hdfc equity... build a portfolio of 5/6 funds. avoid thematic funds. 2. Equitymaster had recommended to its clients to avoid investing in the Reliance Power IPO. The current stock price is still above the fair value determined by us 3. SIPs are hassel free and elimiate the risk that you will ultimately try and time the market... suggest you do SIPs for the bare minimum you can provide for; for the variable income you can alwways invest as and when you have liquidity.
reje asked, i hv invested 5000 sip in hdfc taxsaver and 5000 sip in hdfc equity. i want save it for long term 5 to 10 years is my allocation right. give me another 3 good diversified equity fund in large caps and midcaps. thnx bye
Rahul Goel answers, hi.
well, you have selected two good schemes. however, the portfolio construction is still poor! you have all yoru money in two schemes and that too with one fund house!! you need to diversify!!
umaramanathan asked, Hi I am a NRI with investable amount upto Rs 60000 p.m. I am 35 with a kid. I have an apartment in chennai. Close to 10 lakhs in Bank deposits. How should I invest my free funds. Thank you
Rahul Goel answers, hi. you should invest in line with your needs... so if your child is going to college in say 10 yrs from now, you can definitly take relatively more risk in that portfolio. if you are planning for retirement, which is say 20 yrs out, then you can be even more aggressive. bank deposits tend to be tax inefficient. that too needs to be evaluated. get yourself an honest financial planner!
praveen kumar asked, sir . i want to invest money in MF.Is it good time to invest??
Rahul Goel answers, praveen, hi. we are recommending to our clients at personalfn that they continue with their sips. even the new monies is coming via sips and stps. having said that if the markets fall, like they did in late jan, we probably will recommend to our clients to add to their holdings of funds. however, always this will be in line with the planned asset allocation.
Yashpal asked, Hi Rahul, I had invested Rs 15000/- in sundaram select madcap(G), Rs 15000/- in icicipru fusion fund II(G), Rs 15000/- in HSBC unique opportunity(G), Rs 30000/- in icicipru service industry(D), Rs 10000/- in UTI advance infrastructure fund(G), Rs 30000/- SBI magnum taxgain(D), and also started SIP of Rs 1000/- for Reliance Growth and Vision fund, Rs 1000/- p.m. in JM Basic, Rs 2000/- in HSBC India opportunity. I'm looking for long term investment say 4-5 yrs. Wanted to know about my portfolio, whether I had invested in right funds or not and how much I can get approximate minimum return after 4yrs??
Rahul Goel answers, yashpal, hi. you have six schemes; and you are doing sips in 3 more schemes. and not one of these is an hdfc or franklin scheme!! at personalfn the core of our clients' portfolios tend to consist of schemes from these two fund houses. i think its time you had a serious discussion with your financial planner! either ways, take re-look at your entire portfolio.
lalit asked, I'm 32.Earning3.5L p.a. Investing 40k in LIC in self, wife's and daughter's name. 55k in EPF and about 10k in PPF. Please advice a better strategy for maximising returns.
Rahul Goel answers, lalit, hi. assuming that the LIC investment is traditional insurance and not ULIPs, you have a very conservative asset allocation! now that could be because you have very low appetite for risk, or simply because you have not been guided well. i suggest you read our financial planning guides on personalfn... this should help you answer some questions about how you should plan your finances...
parveenbhat asked, hi sir, i want to invest 50k in market, what would be the best option MF or Shares if MF than advice the name of better return MF with time period would be required ?
Rahul Goel answers, parveen, hi. invest in shares only if you both the time and skill to identify and track stocks. if you do not, then opt for mutual funds. as mentioned earlier in the chat, in the equity category we like funds like hdfc equity and franklin flexicap. i suggest that before you commit monies to any scheme, understand what your objectives are clearly. maybe a financial planner can help you with the entire process.
sunil asked, Is this the right to invest in the market??? What can be the direction of the market in the future ? Can it go down further?
Rahul Goel answers, sunil, hi. at personalfn we have no short term view on the market all we can say is that from a 3-5 yr perspective we continue to like equities as an asset class.
Sufiyan asked, Sir, My monthly Income is Rs 2 lacs permonth. I have 12 lacs in my account but i dont know how and where to invest it. My monthly saving is Rs 130,000. Please suggest me a proper investment plan so that I can get the maximum advantage of my hard earned money
Rahul Goel answers, hi. its very interesting but i have personally met several clients who have money accumulating in their savings bank account not knowing what to do with it!! anyways, i suggest you have someone sit with you and help you draw up a plan to invest the monies so that your obvjectives are realised. if you want personalfn to guide you, you can write to us at info@personalfn.com
joji asked, hi, i have invested in insurance in bajaj alliance, ICICI prudential, and HDFC. I would like to make some investment in MF but I do not know how to begin with. Please advice.
Rahul Goel answers, joji, hi. do two things... one read the money simplified guides on www.personalfn.com. and then employ the services of an honest finanical planner. once you are done, investing will be a joy!
shk1 asked, Dear Mr.Rahul, I have a corpus of Rs.2 crores, could you please suggest a porfolio with a diversified asset allocation. I have already already invested 35% of the corpus in fixed income instruments. Iam planning to invest the balance 65% in equity mutual fund. Appreciate if you could advice me on my financial planning considering my profile as conservative investor. Iam 39 yrs old and planning to retire soon.
Rahul Goel answers, hi. for me to be able to guide you, i need to understand more about you. if you wish, you can email me your contact details and we can discuss this further. i can be reached at rahul@personalfn.com
meera asked, hi.I am a long term invester since 2005 to 2009 when I retire.The recent fall in the market scared me.the values all my investments in shares and MFs(5lacs) fell sharply.with the recession in US and our own slowdown,shd I book profits as nd when I can and get out of the market?If U advise to hold in MF pl advise good long term MFs. meera
Rahul Goel answers, meera, hi. is all your money in equities? or do you have sufficient monies in low risk assets to take care of your retirement needs? depending on this i can guide you... if you do have sufficient funds, then you can hold on... in any case you do not need all your money available to you on the day you retire.
KK asked, Hi...do you think balance fund like TATA BALANCED can give a return of 15% over 10-15 yrs of time?
Rahul Goel answers, hi. our preferred fund in this cateogry is the hdfc prudence fund... we expect balanced funds to return about 12% pa over a long term horizon...
rvcat asked, hello rahul.iam a client of personal fn and have a SIP running as per the advise of your planner.All of them tanked as much as the equities did in same percentage. Sometimes i feel it is a myth to beleieve the MF's do not appreciate or depreciate as much as Equities do.May i have your views?
Rahul Goel answers, hi. as long as you are invested in equities, you will experience volatility. in fact on a year to date basis the sensex is down about 18%; but the small cap indicies are down 30% or so... our recommended funds on an average fell a lot less than the broader market. however, i hasten to add, that personalfn's portfolios are geared to deliver over the long-term. in the short term sentiment is what influences stock prices; in the long term its fundamentals. and we at personalfn focus our efforts on getting the fundamental view right. thank you for opting for personalfn as your financial planner.
techie asked, Hi Rahul. I have invested in several leading 4/5 star rated funds. most of them are diversified. I entered almost 6 months back. What should be my course of action, can I expect atleast 20% annual returns.
Rahul Goel answers, hi. at personalfn we have consciously stayed away from rating funds. we believe investors should invest in funds best suited to them. so if a equity fund is rated 5 star, and you have no risk appetite, then its no good for you. so from that perspective i am unable to take a call on whether you have invested in the right funds or not. i think a return of 15% pa over 3 - 5 yrs is a reasonable expectation from equities as an asset class.
prabhat_tyagi asked, Hi Rahul. i want to ask which one is better icici fusion or hdfc infrastructure ..Keeping a goal of 3 years
Rahul Goel answers, prabhat, hi. we have recommended to our clients at personalfn that they avoid both these funds!
moolah asked, Hi Rahul, I have noticed from your replies during the past few weeks that you are gung-ho about Franklin India Flexi Cap. Can u please elaborate why? I have been tracking its performance for some time now (largely influenced by your recommendation), but I have found that when the market tanks it also tanks heavily, but fails to keep up when there is a surge. Wud u still consider it a wise decision to invest in the fund?
Rahul Goel answers, hi. i agree that in shorter periods of time sometimes good funds do not deliver on expectations. but the reason for this is that their portfolios are geared for delivering over the long term. when we evaluate funds we try and look at how the future could turn out to be; and this is largely a function of the quality of the fund management team. when it comes to flexicap, you cannot get better fund managers! in the long term, expect this scheme to do very well on a risk adjusted basis. i recommend you read our note on flexicap which is available on personalfn.com.. in our archives (free access).
dj asked, Hi Rahul, i have invested around 50k+ in Tax saving MF. All MF are sinking this time. Is it a good choice to invest in MF?
Rahul Goel answers, hi. mutual funds are most of the times the best investment avenues for investors. but you must select your funds well...
Rahul Goel says, Thank you all for participating in the discussion. In case you have any queries, you can always write in to info@personalfn.com. Thank you!
Chat with Rahul Goel every Thursday at 1 pm. To read more transcripts, click here!
(Due to circumstances beyond our control, date and time of chat may change)
