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Opting for insurance? Term plans are the best

October 28, 2009 17:23 IST

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 Wednesday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Goodafternoon everyone, lets start the chat session


roopesh asked, i have 50k to invest for 1 year where do i invest to get minimum 50% returns
Sailesh answers,  at 2009-10-28 12:59:43hi, for time horizon of one year I would not recommend any high risk investment like equity despite the equity markets looking good for the next one/two years. I would recommend investment in liquid funds or bank FDs. As far as the post tax returns are concerned you will have to remove the zero from your return expectations i.e. 5%
MultaniSailesh asked, Hi Sailesh! I work for L&T ECC as an engineer. I earn around 20k. I save around 6-7 k per month. How could i invest..? How could i have good returns for tomorrow???
Sailesh answers, hi, If your investment goal is 10-15 years away then I would recommend that you start investing your savings into equity funds through the SIPs. Equities fetch good returns in the long term and SIPs is a simple method of building wealth over the long term
Tom asked, Hi, I am 34 years old and earning around 70K per month. I have a Housing Loan EMI for 28K per month. I have invested the following: 1) LIC Jeevan Anand Policy for a yearly premium of 60K, 2) ICICI Prudential Life Insurance (ULIP) for a yearly premium of 24K, 3) Metlife ULIP for a yearly premium of 24K and 4) HDFC Young Star Suvidha ULIP for 48K Yearly Premium for my 3 year old kid. Please advice how much more investments I would require for retirement considering my monthly expenses to be around 30K per month currently. Also I would like to know where to invest for a secured retirement plan.
Sailesh answers, hi, the answer to your long question lies in doing a complete finacial plan for you and your family to ensure that you meet the financial goals that you have set for yourself. The plan will guide you precisely as far as your monthly investments is concerned and also the type of insurance and sum assured you should look for
SANJAY asked, I WANT TO INVEST 2000 P.M.? WHERE SHOILD I INVEST. FOR THE SHORT TERM 3-5 YEARS.
Sailesh answers, hi, for time horizon of 3-5 years the ideal investment would be equity funds. However, you should be willing to take risk as equities have the potential to deliver higher returns but with higher risk
dingko asked, are gold etf a good option??
Sailesh answers, hi, I recommend that every investor should have atleast 10% allocation to gold. Gold is a precious metal and acts as a hedge against inflation. Also, it is the most sought after asset class when the world is in financial crisis. To invest in gold the best option is to invest via the Gold ETF. Its easy to buy and sell the Gold ETF as against physiscal gold
rajesh asked, I have very small amount i.e only Rs 10000. How should I invest it smartly so that I can get maximum return
Sailesh answers, hi, to get higher returns you should invest in equity funds. to do that your investment horizon should be atleast 5 years and you should be willing to take higher risk. Equities are very volatile and can lose upto 20% on a single day! However, in the long run equities are the best asset class to invest in
mani asked, Hi! Historically, say for a 10 to 15 yrs time span what were the returns of mutual funds? Given the present context what % returns can be expected over a period of 10 to 15 yrs? Thanks in advance.
Sailesh answers, hi, for equity your return expectation should be in the range of 12%-15%. It should typically give you retruns at which the economy is growing e.g. the GDP growth is 6% and inflation is 6%, hence the total returns from equity should be in the range of 12%-15%. Anything over and above should be taken as a windfall
shan asked, Hi, I am 31 and have a child of 1 yr.earn around 7.5 lacs/p.a and could save around 20k each month. My wife is a home maker.Can you suggest any good term insurance plans for me ? and how much sum assured would be sufficient.
Sailesh answers, hi, as far as insurance is concerned, the best option is TERM plan. It offers you the benfit of higher sum assured with lowest premium. The thought behind this advice is that in case the bread eraner dies, his dependents should be able to carry on with the life as usual maintaing the same standard of living. This is possible onlt if your sum assured is large enough. ULIPs should not be considered at all!
Mob23145 asked, MHi Sailesh! Mine and my wife combined income is Rs 70k per month. Now we are planning to buy an apartment. How much do you think would be ideal EMI, consideriung my income?
Sailesh answers, hi, there is no thum rule to calculating the optimum EMI. A lot will depend upon your earnings and living expenditure. If buying a house is a priority then cut down on your lifestyle epxenditure like frequent changing of gadgets, eating out etc. This way you will be allocate higher amount towards EMI.
prateek asked, hi sailesh i earn around 35k per month i save around 15k per month want to invest in share market which options should i opt for
Sailesh answers, hi,if you are a beginer as far as equity investment is concerned, my suggestion to you would be to invest in equity mutual funds. Start with building a portfolio of well managed DIVERSIFIED equity funds with track record of atleast 5 years to show for. Invest a fixed sum every month through the Systematic Investment Plan (SIP). I am sure if you continue investing via the SIP for next 10-15 years you would defintely be successful in bulding wealth for you and your family which can help you achieve the various investment goals that you have set for yourself
abhijit asked, which bank FD is the best to get higher ruterns
Sailesh answers, hi, in my view go for banks that are stable, PSU banks are the best but their rates are comparatively lower than the other banks. Most of the banks are paying interest @ 6.5% to 7.% for one year. Choose any one of them. I would not recommend any co-operative bank for this purpose
dingko asked, wjat is the equity lookout for investment in medium term?
Sailesh answers, hi, i have a long term view on equity which is definitely positive thoguh the medium term also looks good. I look at markets from 3-5 years perspective. Indian economy thrives on domestic consumption and hence the GDP should grow at 6% over the next few years. Hence, if you are looking at equity investment with 3-5 years horizon then expect average annual returns in the range of 12%-15%
prakash asked, Sir, I am 50 years old now. After retirement I should get around 10K return. For this where and how much I should invest now
Sailesh answers, hi, assuming that your investment of retirement benefits fetches you post tax 6%, you should have a corpus of atleast 20 lakhs to meet your monthly expenses of Rs. 10,000. This is without taking into account the inflation. If you adjust for your inflation for the next 30-40 years, then the amount required will much higher. There is no relevant data avaialable to give you the precise retirement corpus
venky asked, Hello, Am 40 yrs old. i earn approx 75,000pm, i wish to retire from work by 48 and provide some consultancy , so my question is what should be the best way to save for long terms , so that i can keep my mnthly earning rolling.
Sailesh answers, hi, firstly work out your monthly and annual expenditure and adjust it for inflation for your entire life expectancy. Work out the corpus that will be require to meet that expenditure year on year. The balance amount can be invested in equities to ensure that your capital keeps appreciating
mediumclass asked, I want to invest 3000 INR per month which SIP will you suggest?
Sailesh answers, hi, in the diversified equity funds category I recommend - HDFC Top 200 and Franklin India Bluechip Fund
Priya asked, I want to invest money around 35000 but i am not sure , where to invest. My friends suggest me to invest in PPF where I can get the tax benefit .Is there any thing better then PPF.
Sailesh answers, hi, the answer to your question lies in knowing your investment horizon i.e. the number of years you want to invest this amount, the risk you are willing to take and your expected return. All 3 parameters have to be met before any decision can be done. PPF is good option in the debt category and if you want to save tax. If tax savin is not your objective then PPF is not the ideal option
nnn asked, i,I have a Fixed Deposit which expires soon.The amount i get will be 1.5lakhs. Any you suggest any medium -long term investment options? Without too much risk.
Sailesh answers, hi, if your investment horizon is 24 months and more, willing to take some risk with your money, then the best option is MIPs. MIPs typically invest 25% in equities and balance in debt. If equity markets do well as they are epxected to in the next 2-3 years, you can benefit from the same by having a small exposure via the MIP. Go for HDFC MIP - Long Term
Rekha asked, Hi..Is NSC the good investment?
Sailesh answers, hi, if you are investing in NSC from a tax saving point of view, it still makes snese but if that is not the case then I would recommend that you look at bank FDS which offer interest in the range of 6.5% - 7% for one year. NSC pays 8% for 6 years, not a good option minus the tax savings benefit
Leena asked, Hello Sailesh, I am 35 and i have invested in HDFC saving assurance policy and yearly premium is 36K. I want to shift to ULIP for good returns, do you think that will be beneficial?
Sailesh answers, hi, I am not an advocate of ULIPs. In my ULIPs combine investment with insurance which is fundamentally flawed.The best stategy is to keep investments and insurance separate. For insurance TERM plans are the best, for investments look at diversified equity funds
kamal asked,  Hello, Wanted to know if my saving in HDFC TOP 200 Growth (SIP - 2000/month) and BIRLA SUNLIFE 96 Growth (SIP - 3000/month) good enough for a long term prospective as my salary is 20k and i save around 5k/month.
Sailesh answers, hi, you can go for HDFC Top 200 Fund. I am not too sure of Birla Sunlife 96.
vvv asked, how to enter for gold etf? presently i am having demat account..thanks in advance
Sailesh answers, hi, for buying the units of gold ETFs you will have to call your stock broker and give the NSE code of the gold ETF whose units you need to buy. For e.g. I recommend Quantum Gold ETF whose NSE code is QGOLDHALF. Demat account is compulsory for Gold ETFs
Kherde asked, How is Reliance Vison(D), HFDC Top 200(D)and Sundaram BNP Paribas S.M.I.L.E fund (D) cosnidering SIP of 1000 Rs in each. for atleast 15 years.
Sailesh answers, hi, the combination looks good. But ensure that your epxosure to small cap funds like Sundaram SMILE is capped at 20% of your overall portfolio
joji asked, Hi Sailesh, I am working in UAE with a monthly salary of inr 175000..what is best for me to purchase land in kerala or invest in equity market
Sailesh answers, hi, both the options have the potential to deliver high returns over the long term. I am not an expert in real estate hence cannot comment on the land in Kerala but I would advise that you take help from an expert to assess the future potential of the place where you plan to buy the land. As far as equities are concerned, from 3-5 years perspective you can epxect returns in the range of 12%-15%
Hemant asked, is it good to keep money in FD and earn 6.5% interest and take car loan at 9% OR use money and buy the car?
Sailesh answers, hi, I dont believe in buying assets on loan if I have the necessary amount to pay for the same. I would rather pay upfront for the car and enjoy the intangible feeling of owing the car which otherwise is hypothecated to the bank!
pankaj asked, I have 10000 to invest for 1 yr duration. FMP or bank FD which one is good? considering return after tax.
Sailesh answers, hi, currently FMPs do not reveal the indicative yield or the portfolio. Hence, it becomes very difficult to take a call on an FMP especially when it comes to assessing the credit quality of the paper where the FMP is invested. Hence, I would prefer FD over FMPs
Hemant asked, Is it a good idea to start PPF account for 3 yr old child.
Sailesh answers, hi, currently PPF is a good investment for 3 year old child. But if the provisions of the new direct tax code have their way, then PPF may loose their attractiveness. Hence, I would suggest that you open the account and invest in the same. Post 2011 when the Direct Tax Code comes into effect, you can consider the future investments in the same.
dingko asked, is it worthwhile to invest in equity linked insurance plans for children? now??
Sailesh answers, hi, I would not suggest any ULIP for meeting your child's education and other goals. If you are planning to build their education corpus then invest in equity funds directly rather than equity linked ULIPs
arun chavan asked, Hello Sir, I' salaried person with monthly salary of 15000 & i had a home loan of 10000 per month emi & had one child how can plan the balance money. Please tell me how can i save little amount for my shilds future. Thanks a lot in advance.
Sailesh answers, hi, assuming that you want to save for your child's higher education and marriage, you should consider investing in equity funds. Since I do not have all the necessary information, I would advise you to take help of an investment adivsor who will help you with youe child's investment plan
TrailBlazer asked,  Hi Sailesh, I am 28 years old and currently investing in 4 SIP's of 1000 each HDFC Top 200, Fidelity Tax Advantage, SBI Magnum Tax Gain, Kotak Tax Saver and also pay combined annual LIC premium of 27,000 for Jeevan Anand and Money Back Policy. I am planning to get married soon. I am looking forward for an investment of 3000-5000 everymonth but do not have a target or objective for this. Please suggest where to invest ??
Sailesh answers, hi, given your age and assuming that you are aiming at building your retirement nest egg, your current portfolio is made up of tax saving funds and insurance. I would rather recommend that you get an investment plan made for yourself that will precisley tell you how much money should be invested in equity and debt and also the sum assured you should look at. Further, do not add any more tax saving fund to your portfolio, 2-3 funds can do the job of dieversifying your portfolio.
Sailesh says, We have run out of time. I thank you all for participating in the chat session. If you have any further queries, please write to me at : sailesh@personalfn.com

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