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Rediff.com  » Business » Good time to invest in gold? Find out

Good time to invest in gold? Find out

April 23, 2010 12:50 IST
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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, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Hi, goodafternoon and welcome to this chat session


brijesh asked, i would like to safe investment i.e 10 % returns
Sailesh answers,  at 2010-04-22 12:55:45Hi, if you are looking at making 10% on your returns, you will have to take some risk. If your risk appetite is zero, then you will have to reduce your return expectation. In that case bank FDs are the best but your returns will be in the range of 7%-7.5% p.a. If you are willing to take some risk, say willing to invest 20%-25% in equity and balance in debt, then Monthly Income Plans (MIPs) are the ideal investment for you. Your investment horizon however, will have to be atleast 18 months. You can expect returns in the range of 9%-10% p.a. This is not assured or guaranteed. Since the returns are market linked, they tend to fluctuate. But these instruments have the potential to beat the returns from bank FDs.
Rajeshp asked, I have been suggested to invest on HDFC child insurance plan, is that a right option?
Sailesh answers, Hi, if you are planning to buy HDFC Children Plan to meet your child's future cost of education and marriage then this is certainly not the best option. The right approach is to build the corpus of education fund through Systematic Investment Plan (SIP) in 4-5 well managed, diversified equity funds. Any insurance plan for this purpose is not recommended.
MANOJBEDI asked, MANOJ says, i would like to SAFE investment i.e 12 % returns.RELIANCE MIP IS BEST OPTION.PLEASE ADVICE.
Sailesh answers, Hi, no doubt Reliance MIP has delivered good returns (over 12%) in the last one year. But this will not be the case always. Returns from MIP are linked to the performance of equity and debt markets as MIPs typically have 20-25% exposure to equity and balance to debt. The stock markets have given around 100% returns in the past one year and hence the returns from MIP are way above the average. In my view an MIP should give returns in the range of 9-10% p.a. Your holding period should be 18 months atleast and you should be willing to take some degree of risk. Please bear in mind that returns from MIP are not assured or guaranteed unlike interest on bank FD
KP asked, I am 61 & retired. I wish to invest around 10 & of my asset in MF for 10 years for regular dividends. I do not need the money I am 61 & retired. I wish to invest 10% of my asset in to MF for regular dividend. I can keep the fund invested for 10 years. Please suggest the right fund for me. Thanks.
Sailesh answers, hi, you can consider investing the 10% of your assets in well managed diverisified equity funds. You can consider funds like HDFc Top 200, Franklin India Bluechip Fund and DSP BR Top 100 Equity Fund among others. 10 years is a long enough time for investing in equity funds. You can opt for dividend payout option. The funds mentioned above have a very good track reocrd of dividend payout
Ragz asked, Hi Sailesh ... I had four SIPs running for that last 2 years. Last month they got stopped. Is this the right time to sell them?
Sailesh answers, hi, you have not mentioned the reason for discontinuing your SIPs. If you think that markets are at high and you will wait for deep correction to restart the SIPs then in my view your decison is totally against the priniciple of SIPs. Regarding the redemption of units, you should sell then only if you want to balance your portfolio or need the money to pay for the objective you had saved
kkre asked,  hi sailesh i have hdfc top 200, dsp top 100, birla frontline and fidelity equity. in midcap i own idfc premier equity and sundaram select midcap and franklin flexicap and dsp tiger. wanted to shift to dsp br equity from dsp tiger and want to add birla midcap and icici prudential discovery .please comment and want to come out of franklin flexicap.
Sailesh answers, hi, overall a good portfolio. Will not recommend any new midcap fund like Birla and ICIC PRU Discovery. Franklin India Flexicap is a good fund. Alternatively you can invest in Franklin India Prima Plus
aumshantii asked, could u pl shed light on the infrastructure bonds mentioned by the govt in this budget, investment of rs 20000 in which wud be eligible for deduction U/S 80c? thank you
Sailesh answers, hi, the details are awaited.
Piyush asked, I have some diversified mutual funds which I will keep for lon term investments (DSP BR top 100, DSP BR equity, Fidelity India Growth,UTI Opportunities). Now I want to invest in some MID Caps fr a shorter duration. Will UTI MIDCap, Birla SL Midcap-Plan A,IDFC Premier Equity will be good options? Please suggest some other options also in Mid caps where I can stay invested for 1 year and take out the good returns.
Sailesh answers, hi, while your selection of funds is good, I would not recommend different time horizon for large and midcap funds. Equity invetments should be done for the long term which in my view should be atleast 5 years and more. You have a time horizon of one year for mdcap funds which in my view is very very low. Midcaps can go up sharply but the same holds true for going down. In my view you want to play the momentum attached with the midcap stocks and hence this short term view. My answer is no to midcap funds if your time horizon is one year
Divyang asked, I invest around 2 lakhs in LIC premiums, 70000 in PPF (from this year). I am 35 yrs of age and after deducting my monthly expenses i still have 20000 per month of surplus. I expect to have Pension (after 25 yrs) in value equivalent of Rs 25000 today. How should i do further investment. I also have 2 yrs old kid. have purchased Jeevan Komal for him (premium rs 25000 yrly). Please advice.
Sailesh answers, hi, the amount of premium you are paying for insurance is deifintely on the hihger side. Since I do not know much about your financials, I can say that the investment you are doing should be able to help you reach your life goals. Rs 25000 after 25 years in my view will be too less. I am afraid you will have to plan your finances very well. You can write to me with more details at sailesh.multani@rediffmail.com
Imran asked, I am 34. Which one would be the ideal choice in todays environment ULIP/Mutual Fund or Real Estate Investment
Sailesh answers, hi, I would certainly say NO to ULIPs in whatever shape or form they are available. Regarding mutual funds (i am assuming you are referring to equity funds)or Real Estate, the choice is yours. Both hav the potenital to build wealth over the long term. Equity investment requires very low initial capital investment compared to real estate.
vishalthappa asked, Sir,Is fixed deposit is 100% safe or insurance of FD is required.
Sailesh answers, hi, Bank FDs are insured upto Rs 100,000 by the banks. Technically speaking bank FDs are not 100% safe. If the bank goes into a problem or goes bust then depositors stand to lose the deposits in excess of Rs 100,000. Since the banks are very tightly regulated by the RBI, bank Fds are considered to be 100% safe
Buffet asked, Dear Mr.Sailesh - can you comment on the time frame of investments in shares. The old school held that stocks had to be held for the long term. However now due to the fast changing circumstances does it still hold?
Sailesh answers, hi, in my view equity investment should be done with a time frame of 5 years atleast. Fast changing economic scenario does not alter the risk profile of this asset class. Equity have the potential to buid wealth but it happens over a period of time, generally 5 years and more.
naveenhm44 asked, Is it benefit to invest in LIC's Wealth plus
Sailesh answers, hi, this is a ULIP. I would not recommend this to any investor. For investments mutual funds is the best. For insurance term plan is the best. Its always better to keep investments and insurance separate. ULIPs are a combination of investment and insurance. Hence, not desirable
kris asked, Hi Sailesh, how about investing in gold bars from bank. Is it a good idea.
Sailesh answers, hi, I would not recommend any investor planning to buy gold from banks. Banks charge 4$-5% premium over the market rate. Further, banks will not buyback the gold you bought from them. You will have to go to the jeweller to sell the same. the best way to invest in gold is through Gold Exchange Traded Funds (ETFs)
kbram asked, Hi sailiesh, I'm learning many things through discussion. My question is, I have SIP in HDFC equity, HDFC prudence, ICICI Dynamic, Reliance Growth, Reliance power sector and DSP tiger (SIP since 2006). Is it right to discontinue DSP tiger as the growth is not good in the last six month. Is my portfolio is right. I'm looking at 10 years horizon.
Sailesh answers, hi, DSP TIGER is a infrastructure fund. The performance of the fund is tightly hinged onto the performance of few sectors which together form the infrastructure theme. I would not recommend this fund to any investor. The best fund to invest in equity category are the diveirsified equity funds. these give the fund manager a lot of flexibility to invest in the sector of their choice
PAWANKUMAR asked, I am 51 year young, Service : Private sector.I have about Rs. 50,000/- to spend now and Rs. 5,000 every month. Pl. advise some good mutual funds with 3-5 years period
Sailesh answers, hi, you can consider funds like HDFC Top 200, DSP BR Equity Fund and Franklin India Bluechip Fund among others
Ap asked, Pl tell me the future of Gold for the next three years
Sailesh answers, hi, I would recommend gold to all the investors from portfolio diversification point of view. Allocate 5-10% of your overall portfolio to gold. Gold is also a hedge against inflation.
abc asked, Can you please give more information about risk involved in MIP and expected return on lower side?
Sailesh answers, Monthly Income Plans (MIPs) are offered by most mutual funds in the country. MIPs are hybrid funds with 10%-30% exposure to equities and balance to debt. While the debt portfolio is designed to generate regular income and add stability, the equity portfolio aims for increasing the overall returns. Since there is an equity component, the investor should be willing to take some degree of risk. Also, the returns are not guaranteed or assured unlike a bank fixed deposit. Although the name Monthly Income Plan, monthly income by way of dividend is not assured. Dividends are paid subject to profits made by the fund. If you are opting for dividend option, then quarterly dividends are ideal. If you are not aiming at generating regular income, then growth option is the best. These funds are treated as long term capital assets if held for more than one year from the date of investment. You can avail of indexation benefit to reduce your long term capital gains tax on the appreciation, if any. The ideal investment horizon to reap the benefit of investing in an MIP is 18-24 months. Expected returns should be in the range of 8%-10% p.a.
suresh asked, Hi, I want to invest Rs 2 lacs for 3 years. can you suggest me where i have to invest in MF,PPF or some other scheme.
Sailesh answers, hi, if your investment horizon is 3 years then the ideal mix should be - 65% allocation to bank Fd, a small allocation to equity say 25% and the balance to gold
Mayank asked, I have started 4 SIPs from last week in folowing funds: HDFC Top 200, HDFC Equity, Fidelity Equity and DSP Balnkroks Equity. All SIP have growth options. Do you have any suggestion for further investment?
Sailesh answers, hi, all the 4 funds are good. Continue with the SIPs over the next 4-5 years, I am sure you will build wealth over the long term.
bindu asked, Is this a good time for gold investment?Do you recommend Gold ETL trading for short to long term gains.
Sailesh answers, Hi, according to me investment in gold should be looked upon as a means of diversifying one's investment portfolio. An allocation of 10% of your overall investment portfolio is reasonable. Investment in gold is a hedge against inflation. Since gold is a precious metal, it becomes the most sought after commodity in times of financial crises like the one witnessed in year 2008. Don't rush into buy gold. Invest a small a sum every month. Spread your investments over the next 6-12 months.
lkj asked, i have invested in ICICI Pinnacle ULIP..is it a good investment?
Sailesh answers, hi, this is a ULIP. Stay away from the same. Invest in well managed diversified equity funds
nand asked, hi sailesh i have hdfc top 200, dsp top 100, birla frontline and fidelity equity. in midcap i own idfc premier equity and sundaram select midcap and franklin flexicap and dsp tiger. wanted to shift to dsp br equity from dsp tiger and want to add birla midcap and icici prudential discovery .please comment and want to come out of franklin flexicap also I have some diversified mutual funds which I will keep for lon term investments (DSP BR top 100, DSP BR equity, Fidelity India Growth,UTI Opportunities). Now I want to invest in some MID Caps fr a shorter duration. Will UTI MIDCap, Birla SL Midcap-Plan A,IDFC Premier Equity will be good options? Please suggest some other options also in Mid caps where I can stay invested for 1 year and take out the good returns.
Sailesh answers, hi, request you to post this question to me on the mail. my email id is: sailesh.multani@rediffmail.com
Srini asked, Can you suggest a good investment plan for pension after 10 years?
Sailesh answers, hi, the purpose of pension is to generate annual income for you post your retirement. In my view there is an alternative and better approach to pension plans. Build the required retirement corpus comprising of equity, debt and gold by the time you retire. Once you retire invest this corpus into a fixed income genrating asset like bank FD. Pleae keep in mind that the return you get on the FD is sufficent to meet your post retirement expenses. Most investors do not factor in the inflation while taking pension plans.
pp asked, I have dont only safe investment like FD,NSC,LIC..I dont want to take any risk as i have seen many of my friends who have done investment in shares and equity are always in loss and i dont hv surplus money..Do i need to worry about my future ?
Sailesh answers, hi, it will be difficult to comment on your current financials as there are no adequate details. In my view some risk is inevitable. IF you want to make your money work harder for you you will have to take some risk. If you are sure that you will be able to meet all your goals by investing in risk free investments, then you can ignore high risk investments like equity funds.
true asked, I am a beginner in this field. Where should I start to get knowledge and confidence for investing in Stock market related investments?
Sailesh answers, hi, you can consider visiting websites like equitymaster.com, valueresearchonline.com,moneycontrol.com. for beginners I recommend that they start investing small funds in equity funds through SIPs. I have mentioned the fund names in this chat in reply to a similar question.
PRABHASH asked, I have an income of Rs 7 lakhs per annum and expenditure of 2 Lakh per annum.What should be my invest plan
Sailesh answers, hi, its good to read that you are able to sav a significant portion of your income. Every invesment plans is customised accordingto the need of the indivual investor. The plan is based on his current financials, future goals, risk appetite and number of years within which the goal has to be reached. You can write to me with more details at: sailesh.multani@rediffmail.com
Giri asked, Hi, I have invested in Reliance diversified power in 2008 @85/unit. Current NAV is nearly 80. Is this a right MF to keep for long term.
Sailesh answers, hi, this is a high risk high return fund. I would not recommend this fund to any investor. I would suggest that you redeem this fund and reinvest in fund like HDFC Equity Fund.
raj. asked, what is ur opinion on fidelity India growth?? i am planning to do sip in that mf. time period 3 yrs
Sailesh answers, hi, consider starting an SIP in Fidelity Rquity Fund instead. This fund has done well and its performance has been farily consistent.
raj. asked, I want to invest in mutual fund sip and also save tax. do u suggest to go for sip in tax saving mutual fund as money get blocked for next 3 years.
Sailesh answers, hi, all tax saving investments have a mandatory lock in. Its a good idea to start SIP in ELSS funds. Why wait till the end of the year and make hasty investment decision. this will be light on your wallet and also help you average your purchase price.
Sailesh says, We have run completely out of time. I thank you all for participating in this chat session. If you have any questions which were not answered during the chat, you can mail them to me at: sailesh.multani@rediffmail.com
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