Are you always at a loss while planning your finances? Are you aware of the investment options available in the market?
How best can you plan your finances? What are the crieria for evaluating an investment option?
Are mutual funds profitable investment options? When and how should one buy mutual funds?
In an hour-long chat on rediff.com on Wednesday, financial planning expert Irfan Rupani replied to many such readers' queries. Here is the transcript:
irfan says, good afternoon everyone ... let's beginsumit asked, which all parameters can we use to compare MF.
irfan answers, at 2008-08-13 12:50:04hi, you should look at various factors like a long-term track record on the returns front, performance on risk parameters, adherence to investment mandate, among others.
ramesh asked, what are the mutual funds exempted in Income Tax U/s.80C
irfan answers, hi, tax-saving funds (also called elss) offer investors tax benefits under section 80c of the income tax act. investments upto rs 100,000 pa are eligible for the tax benefits
Manohar asked, Plz tell me which is the best option..Investing on ULIP or MF..?
irfan answers, hi, ulips offer both insurance and investment benefits; conversely, mutual funds are pure investment avenues. you need to decide what suits your needs the best and then decide.
kodlekere asked, Hi Irfan, I wanted to invest a sum 10k in mutual fund. Which one do you suggest? It must be risk free.. Thanks in advance for your valuable advise
irfan answers, hi, mutual funds are market-linked avenues. hence, there is always a degree of risk involved. if you are seeking a risk free investment avenue, would recommend that you opt for fixed deposits or small savings schemes like PPF, NSC.
kidface asked, Does SEBI allow transfer from one tax saving fund to another if i am not happy with the performance.
irfan answers, hi, tax-saving funds have a 3-yr lock in. beyond that, investors are free to liquidate their investments.
pragnesh asked, Which are the best MFs for SIP?
irfan answers, hi, there is no such thing as a best mf for sip or even a best mf for that matter. as an investor, you need to select a fund thats right for you and then consider investing in it via the sip mode.
jose asked, Hi ifran, iam planning for an tax benfit, i have to invest 1 lack where should i invest in MF or?? kindly advice
irfan answers, hi, tax planning is no different from investing in the normal course. hence, your risk appetite needs to be taken into account. if you can take on risk then your tax saving portfolio should be dominated by elss and ulips; conversely, for a moderate risk taker, tax saving fds and small savings schemes (ppf, nsc, 5-yr post office time deposits) should account for a larger portion of the portfolio.
GHJ asked, SHOULD I ENTER IN MARKET NOW
irfan answers, hi, we have addressed this question in an article recently. please click at http://www.personalfn.com/detail.asp?date=8/11/2008&story=1
asim asked, Hi Irfan, I would like to build a portfolio of MFs with 50% Large cap, 25% Mid cap and 25% Smallcap/sector funds. The investment will be as SIP for at least 5 years Can u please let me know the best 3 funds in each category to enter now. Thanks
irfan answers, hi, the composition of your portfolio would depend on the investment objective that you wish to accomplish. also, the portfolio needs to change as you close in on your target date. will need more information about your risk profile, investment objective and existing investments, among others. please write to me at info@personalfn.com
harsh asked, Hi Can you pls suggest is investing in balanced fund like DSP ML Balanced fund good option in current market, or i go for all equity fund like HSBC equity?
irfan answers, hi, the investment proposition of a balanced fund (dsp ml balanced) is distinct from that of an equity fund (hsbc equity). you should let your risk profile and investment goals determine which fund you invest in. incidentally, dsp ml balanced is among the better balanced funds in the country.
Panani asked, Hello, howz portfolio with DSP MP Equity,Reliance Vision and HDFC Top 200? Thank you in advance.
irfan answers, hi, dsp ml equity and hdfc top 200 are among the better managed diversified equity funds, that we recommend as well.
sunilmandvikar@gmail.com asked, hi.irfan,tell me about mip
irfan answers, hi, mip (monthly income plans) invest around 15%-20% of their corpus in equities and the balance in debt instruments. the intention is to offer monthly returns in the form of dividends. however, it should be understood that returns are not assured, also, there is no guarantee in terms of capital protection either.
djramrock asked, I purchased MF in Nov 2007 when the markets were high. My advisior advised me to invest SIP in DSP Equity and ICICI Infra , invested 30000in Tata Indoglobal , 10000 in JM Agri Infra , 25000 in ING FoF , 25000 in JM basic , 25000 in reliance divisified fund , 30000 in Sundaram energy , 50000 in Reialnce natrual resources , 10000 in SBI Magnum , 10000 in DSP world gold and now realsied that most of these MF are less by 35-50 % and feel that I have been taken for a ride by my MF advisior. I discontinued my SIP in DSP equaity and moved to DSP equity top 100 . please advise me how I should restructure my protfolio and which funds would give me good return as aI am a long term investor say 15-20 years
irfan answers, hi, your portfolio is skewed in favour of sector/thematic funds (high risk) and nfos as well (untested entities). what you need to do is introduce some well-managed diversified equity funds/balanced funds with a proven track record. also, there might be a case to introduce some debt/fixed income component in the portfolio. need to know more. please write to me at info@personalfn.com
korla asked, What is the difference between a SIP and investing regularly every month whenever market is down in that particular month?
irfan answers, hi, in an sip, the invstment date is predetermined and investments are made using post-dated cheques/auto debit. the other method mentioned by you, will entail an effort on the investor's part every month.
bimtech asked, hi irfan....i m a 24 yr old. dont know much about the share market, but i m very interested in investing in it....so what should be my course of action
irfan answers, hi, if you have the risk appetite and a long term investment horizon (at least 3-5 years), then you can consider opting for the mutual funds route. direct investing in equities is suitable for investors who have understanding of markets, economy among other factors and also the time to dedicate to the activity.
rahul_cool asked, considering the fact that this year even Mfs are giving lesser return then bank FDs..what will u suggest to new comers in investement world.????
irfan answers, hi, fds and mutual funds (assuming you are refering to equity funds) are different investment options. fds offer an assured return and safety of capital. mutual funds are high risk-high return avenues. investors would do well not to compare them. instead based on the investor's risk taking ability and investment horizon, he should consider making allocations to both in appropriate proportions.
rajanikant asked, is FMP is a good tax saving option?
irfan answers, hi, fmps do not offer tax benefits. in the mutual funds segment, only investments in elss (tax-saving funds) are eligible for tax benefits
vclingam asked, hi, which one is best diversified fund or sectoral fund
irfan answers, hi, a diversified equty fund can invest across stock segments and sectors in a seamless manner. conversely, a sectoral fund can only invest in the underlying sector. on account of the lack of diversification, a sectoral fund lies much higher than a diversified equity fund on the risk-return chart. sector funds are best suited for informed investors who can time their entry into and exit from the fund.
Munish asked, Hi Can you tell me something about the risk adjusted parameters to look for when grading MFs?
irfan answers, hi, you can look at standard deviation, sharpe ratio, sortino ratio, the fund's beta, among others.
Amol asked, My portfolio comprises of SIP of Sundaram BNP Paribas Select Focus- 4000/-, DSP ML Tax Saver- 3000/- SBI Magnum Tax Gain 2000/- and Reliance Diversified Power Sector Fund-1000/-. How would you rate this??
irfan answers, hi, its lop-sided in favour of aggressively managed funds (high risk). would like to see some conventional diversified equity funds like hdfc top 200, dsp ml top 100, among others in the right proportion.
irfan says, hi, guess we have run out of time. thank you all for participating in the chat. if you have any further queries, please feel free to write to me at info@personalfn.com
