Budget is just round the corner and it's time we gave some serious thought to investments. Will mutual funds be the safest form of investments? Are you aware of the investment options they provide?
What are the other investment options that can accrue maximum profits? What are the crieria for evaluating a fund?
In an hour-long chat on rediff.com on Wednesday, 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!
anand asked, i am very confuse on my investment can somebody help
Rahul Goel answers, at 2008-02-20 13:17:06anand, hi. what is it that you are confused about? if you are starting to invest then naturally there is a lot out there that you need to understand. i recommend that you work on two fronts - one, identify an honest financial planner to guide you. and two, start reading up on the various financial instruments available out there. these two steps would be a good start...
andy asked, where shouls i invest rs 1,00000
Rahul Goel answers, andy, hi. well, before i can tell you where to invest the money i need to a couple of things about you. why do you wish to invest? for how long can you remain inevsted? do you have appetite for risk? what is the kind of returns you expect? details of your other assets... only once we have this can we guide you on where to invest.
Pramod asked, Hi Rahul, is it a good time to buy tax-saving funds? I haven't yet invested enough to save tax this year?
Rahul Goel answers, pramod, hi. there is little time left for the financial year to end. so in that sense you cannot delay the investment for long. you can maybe invest half the money now, and the other half in a couple of weeks from now. that way you will minimise the risk of mis-timing the market.
Divya asked, i am 24 year old female working as a civil engineer, want to invest money in some useful plans, can you suggest me the company and type
Rahul Goel answers, divya, hi. we need to know a lot more about you before telling you where to invest your money! having said that, if you are investing for atleast a 3 - 5 yr horizon, and have appetite for risk, then you should have a considerable portion of your money in diversified equity funds. with respect to insurance, opt for term plans. do not invest in ulips till you have completely understood the cost structures...
Abhijeet asked, Dear Mr Goel, how would JM Basic fund rate in your opinion? I don't want you to criticise it, but if I were to buy it -- as was recommended by my friends -- would you say yes or no? Thanks.
Rahul Goel answers, abhijeet, hi. let me put it this way. personalfn recommends to its clients that they not invest any money in sectoral/thematic funds. in case clients are very aware of the risks involved and they still want exposure, then we recommend an allocation of a max of 10% to a mid cap fund.
Deepti asked, Hi I am regular invest in ELSS ,so should i do SIP in ELSS and make this as investment for 5-7 yrs period
Rahul Goel answers, deepti, hi. SIPs are a great way to accumulate wealth. if you are salaried, and need to contribute to ELSS every year, then SIPs is a great idea...
babu asked, which is the best opt childern investment
Rahul Goel answers, babu, hi. in our view, this is an ideal combination - term insurance for yourself, and aggressive investments for your child. the term insurance will take care of your family's needs in your absence.
raaniiji asked, hi sir, i need to accumulate 10laks after in 5yrs. so, what kind of plans and how much money per month or year i should invest and where should i do this?
Rahul Goel answers, hi. you will need to invest about rs 12,000 pm in instruments yielding you on average 15% pa. this kind of a return is possible from equity funds. but you need to select the funds well, and also, as you approach the 5 yr maturity, you need to de-risk your portfolio by moving money to lower risk instruments like deposits.
rrrrrrr asked, hi! I am 41 years old. I hv one son and daughter studying 5th n 10th std respectively. The below are my asset details 1.Flat- worth 40 lacs(No Due/EMI) 2.House- 90 lacs. Next month it would be demilished n reconstrut with budget of 40 lacs. planning to take home loan for which EMI would be 40,000 p.m and the same could be paid by rent out the house after constn. 3.Take home - 1 lac 4.Cash- 15 lac (portion might be used for initial house costn) 5.psot office deposit- 9 lacs 6.Mutual Fund- Rs.25,000 p.m thorugh SIP(Started since nov 2007) 7.Expected to get cash of 15~ to 20 lacs this quarter from my father as my share fm family. Considering all the above, please advise me where i can invest the above surplus cash to enable me to get safe n decent returns.
Rahul Goel answers, hi. the cash and the expected inflow from your family amount to rs 35 lacs appx. this is more or less in line with what you need to spend to recontruct your house. now here's a question... are you comfortable with a liability on your books? if you are not, you could spend the cash you have to construct the house... when the rental income flows in, you could invest that. the other alternative is that you invest the monies now, and then service the EMIs from the rental income. in case you decide you hold back the cash and take a loan, then you may not really benefit ... a safe return today is about 8% pa; but the loan may cost you the same or even more than that, even if you adjust for the tax benefit... the situation will change if you are willing to take "risk" by investing money in equity funds and hoping to earn say 15% pa over 5 - 10 yrs.
goel asked, whats ur opinion on new sectoral funds like infrastructure funds - would you recommend them to someone who already has good exposure to diversified funds ?
Rahul Goel answers, hi. we recommend that investors avoid investing in infrastructure funds. most of these funds are simply marketing gimmicks to mobilise more AUM for the AMC. if you are in a well managed diversified fund then your fund manager always has
the option to inevst in infrastructure stocks if they fit his risk return expectation...
subbu asked, Hi Rahul, good afternoon. As part of my tax planning i have invested in the following ELSS plans thru SIP for last 2 years:-- HDFC LT Advantage Fund, HDFC Tax Saver, SBI Mag Tax Gain, Principal Tax Saver, Fidelity Tax Adv and DSP ML Tax Saver. I have also invested in Tata IndoGlobal Infrast and FT Asian Equity funds recently during thier NFO. I am planning to hold them for long term say 5 years. Please suggest my MF Poftfolio. I have also invested in the following Equities with a view of 2-3 years, pls suggest my Equity Portfolio also - DLF, GMRInfra, JPAssociates, RelCommn, RelPetro, RelPower, NTPC, SAIL, Suzlon and TCS. Thnx in advance.
Rahul Goel answers, subbu, hi. i will comment only on the funds. with respect to tax funds, you have more than you should... over time you should consolidate them into two funds only. with regards to the other funds you own, i suggest you switchout of them... assuming you understand the opportunity and the risk equities represent, you should be invested in diversified equity funds to begin with.. an example over here is hdfc equity. the funds you own are thematic/sectoral... not good to have your entire portfolio comprise such schemes.
jayaseelan asked, hello sir, can you tell me what is systametic investment plan? which is the best one? what are sip's available and how to proceed with it?
Rahul Goel answers, hi. a systematic investment plan, or an SIP, is a method of investing money into an instrument. when you execute an sip you effectively commit to inevsting a fixed amount of money, on a fixed date every month, in a designated mutual fund scheme, for a defined period of time. so you could invest say rs 5000 every 10th of the month, for 6 months in a scheme. what you need to be aware of is that it is very important to select the right scheme where the money is ultimately invested. doing an SIP into a poorly managed scheme will not benefit you at all! so what you should do is sit with your financial planner, draw up an investment plan which will mention which mutual fund schemes you should inevst in. you can then invest the monies in to these schemes by doing SIPs.
Parvez asked, Hi Rahul, I am 30 yrs old married plannning for a child my wife is working with salary 24000/- monthly i am into business where i remove 30000/- every month I have taken ulip of 10000/- on my wife's name and have invested in Fidelity Rs 10000/- have invested in Mutual fund rs 30000/- and in shares rs 75000/- My wife has invested in a SIP Mutual fund for 36 Months rs 1000/- every month. Within 10 yrs i should be financially strong what u suggest. Pls advice
Rahul Goel answers, parvez, hi. for starters, do not take any more ulips. instead consider taking a term insurance plan for yourself. next, its good that you are saving money in funds. but are these funds best suited for you? there is a need to do two things -one, ensure you are investing in the right schemes. and two, that you are saving enough to be financially strong 10 yrs from now. a financial planner should be able to guide you on this...
Jeet asked, Hello Mr. Rahul, Good Afternoon. I am 35 and have just quit my regular job. Which means there would be no steady income. At any one month, I might get surplus amount, while on some months, I can even go NIL. I am yet unmarried. How do I plan my investment on three counts. 1) Regular Monthly Income 2) Long term Retirement 3)Expenses like marriage, parents health etc which can be sudden. I know it is bid odd question. But please do reply. Thanks.
Rahul Goel answers, jeet, hi. the questions are not odd! these days we meet several people who are quitting regular jobs to start off on their own! planning for the three needs is not difficult at all. we will need to define monetary goals for each of these needs and then plan accordingly. the investments can be made as and when you have a surplus... to being with maybe you can use the financial planning calcs on personalfn.com.
rajganpat asked, hello sir, i have approx 25 lacks of my Pf gratuity etc after retirement . pl suggest the ways to get maximum returns. Also note that i have to manage my own affairs , hence i cant take risk as i am retired (61 yrs)now and i have a daughter ( she is 20 ) to get her married. pl advise good options to get max returns with minimum risk, if i put 25 lacs in bank i am getting max 9-10% rate of interest pa nnum
Rahul Goel answers, the 9 - 10% is all that you can get if you do not want to take risk. and you cannot take risk, given your profile and needs. in all probability the bank deposits will be best for you... try HDFC deposit (diff from HDFC Bank)... sometimes they tend to pay slightly higher rates of interest...
kven asked, Hi, I am 24 years old. Looking for a financial adviser. Can you please let me how to find and how will be suited for this???
Rahul Goel answers, kven, hi. the best way to find an advisor is to talk to your friends and family who are using the services of one. if they are happy with the services being provided no harm in evaluating the person. before making the final selection be sure your advior is going to give you honest advice above all else...
Deven asked, Is investing in today stock Market risky?
Rahul Goel answers, deven, hi. when you are investing in the stock markets you are taking on risk. this fact remains unchanged in bull and bear markets. before committing monies to stocks or equity funds, its very important to understand this.
NAIR asked, I am an NRI and I want to invest Rs 25 lakhs in mutual funds right now. What is your suggestion ?
Rahul Goel answers, hi. well, all i can say is that be sure that the funds you select are best suited to you. if you are willing to take risk, and remain invested for 3 - 5 yrs, then diversified equity funds are a good option. but be sure you select the right funds..
Rahul Goel says, Thank you all for participating in the discussion. In case you have any query, please write in to
info@personalfn.comChat with Rahul Goel every Thursday, 1 pm
(Due to circumstances beyond our control, date and time of chat may change)
