The countdown to Budget 2010 has begun.
What has Finance Minister Pranab Mukherjee in store for you? Will he announce more tax sops? How does he plan to rein in the ballooning fiscal deficit? Will his proposals impact your investments?
From the common man to corporate honchos, all are waiting eagerly for the Budget announcemnets. If you are one of them then help is at hand.
In an hour-long chat on rediff.com on Monday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
Sailesh says, Goodafternoon, I welcome you all to this chat session.
Ravi asked, Does the market get affected budget announcements?
Sailesh answers, at 2010-02-22 12:58:13hi, budget isthe government's statement of policy for the next financial year. Yes, budget announcements do afftect the stock prices of those companies who will be impacted favourably or otherwise by the proposesd changes in the policies. You will see lot of volatility in stock prices in the run up to the budget. I would advise investors to be patient. Understand the budgets's implication and then make your investments
Mukesh asked, Dear Sailesh, I want to invest Rs. 1 lakh in M.F's with a time line of 1 - 2 years. Could you please suggest some M.F's? Thank You
Sailesh answers, hi, the best investment in today's scenario for 1-2 years is Monthly Income Plans 9MIPs). These are dbt funds with 20-25% allocation to equities. If you are willing to take some risk then MIPs are the best. If you want safe assured retruns then bank FDs are the best for you.
pinky asked, hi, i am 58 years old, in govt. service. does taking mediclaim lower my tax liability, how much can i take and from whom. thanks
Sailesh answers, hi, yes medclaim or insurance premium paid for health insurance qualifies for deduction under section 80D of income tax act upto Rs 15,000 p.a. You should definitely take medical insurance even if you are close to retirement. More than tax it will take care of any unforseen medical expense that you may have to incur
Shah asked, Can I invest my money in my wife's name so that return income can be filed in my wife's return? if so how?
Sailesh answers, hi, if the money you are going to invest is a part of your income, then you cannot invest in your wife's name. Even if you invest in your wife's name and earn any income say interest or capital gains, the same will be clubbd with your total income. Hence, my adivse to you would be to invest your money in your name.
RITEISH asked, CAN I INVEST IN SUNDARAM GROWTH AND HDFC PRUDENCE I AM RETIRED PERSON
Sailesh answers, hi, both these schemes are high on risk. Sundram Growth is a equity fund and HDFC Prudence is balanced fund (invest atleast 65% in equities). If your risk apetite is high then you can consider investing in these funds. If its your retirement money , then invest a small portion, say 15%, in equity oreinted funds. I would prefer Franklin India Bluechip Fund over Sundaram Growth Fund.
ABC asked, Will Direct Tax code get implemented?
Sailesh answers, hi, I am not sure if the Direc Tax Code as it was prosposed will be implemented. In my view it has been deliberated upon and there are lot many changes to it. We will have to wait till the budget day to get some clarity on this issue.
MULTANISAILESH asked, HI SAILEH GOOD AFTERNOON I NEED TO INVEST IN BHARATI AXA LIFE INSURANCE CAN U PLEASE GUIDE ME ALSO NEED UR ADVICE ON DOING FD OF FOR Rs.2 LAKS. IS IT OK IF I DO BEFORE BUDGET SESSION.
Sailesh answers, hi, buy only Term Plan as far as insurance is concerned. Dontgo for any other form of insurance. Evaluate various Term plans with the help of an nsuranceinsurance advisor and go for the best. Please dont go for an insurance policy as an alternative to bank FD. Fixed Deposit are different from insurance. If you are looking at safe and assured income then FD is the best.
pankaj asked, i have invested in HDFC top 200,hdfc equity,hdfc tax saver, sundaram select midcap and can rebeco equity tax saver how is my profolio.
Sailesh answers, hi, you have an excellend portfolio. I would have preferred Fidelity Tax Advantage over Canra Robeco Tax Saver. Keeping investing for the long term 5-10-15 years. I am sure you will build wealth for yourself
bharat asked, hi shailesh ji. is it right time to invest rs- 50,000/-in equity funds before budget or should i wait till budget. suggest good mf in equity scheme.
Sailesh answers, hi, I have said at the start of my chat that markets tend to be very volatile as we near the budget day. This is on the back of expecations of various section s of the indusctry on what the impact of budgt will have on their particular industry. the markets have corrected by 7% from their recent paeaks.The India story till hold. From long term perspective eqity markets are the place to be in. I would advise you to invest Rs 25000 immediately and the rest after the budget when whe even specific risk is out of the way.
maheshren asked, Is it worth to give a fianacial planner 10-15k ?
Sailesh answers, hi, I would definitely advise you to take help of an investment professional to help you with your investment planning. Regarding the fee of 10-15k, it depends what your needs are and if the advisor is able to justify the fee he is going to charge. I think 10-15k is the fee which most of the planners charge these days.
rajj asked, i want to invest Rs 50000/- for my 3 yr old child. it shall be one time investment only and looking for long term return min 10 years. kindly suggest.
Sailesh answers, hi, you have an investment horizon of 10 years which is ideal for eqquity investments. I would advise you invest 75-80% of your money in diversified equity funds. You can consider funds like HDFC Top 200, Franklin India Bluechip, DSP BR Equity and Sundaram Select Midcap among others.
shankar asked, any hope that the FM will give the salariee class some tax sops?
Sailesh answers, hi, this question is on every salaried class individual. This is the 2nd budget of the Government. According to me the 1st and the 5th budget of any government are popular budget. 2nd, 3rd and 4th budget may not be very popular. Also, the government is dealing with a huge fiscal deficit. I dont expect any further tax sops in the coming budget.
Char asked, What, according to you will be the safest investments post Budget?
Sailesh answers, hi, according to me the nature of any asset class or investment product does not change with the budget proposal. Yes, the investments may become attractive or less attractive based on the changes introduced in the budget. But the riskiness or safety does not change. Hence, equity will continue to remain high risk investment and Bank FD will contintue to be the safest investment post budget.
Som asked, Hi Sailesh...I am 24, and on my first job in the IT sector...does investing in SIPs make sense? Or should I choose something more dynamic?
Sailesh answers, hi, I dont think too much of dynamism is good for investmens or your portfolio. Start with the SIPs. Build a portfolio of well managed diverisified equity funds, balanced funds and gold ETFs. I am sure you will build large enough corpus to help you meet all the life goals that you have or may set for yourself.
jalpa asked, which scheme of HDFC is good for long term investment?
Sailesh answers, hi, I like HDFc Equity and HDFC Top 200 in the equity fund category. HDFC Prudence is the best fund in the balanced fund category.
Mahesh asked, Is this a good time to enter in a market where market is already corrected a lot or is there any chance of more correction pending in the market? Is this a good time to invest for long-term (1-2 years) in the share market?
Sailesh answers, hi, to begin with I would advise you to increase your time horizon to 5 years if you want to be a successful investor in the equity markets. The markets have no doubt corrected recently but that does not mean that it cannot go down further. There are few concerns on Greece and Spain defaulting on the public debt. But this will only affect the sentiments. The market may fall further. If you are long term investor, break up your inveestment amount into 3 parts and invest the first part immediately and the 2nd after the budget. Dont wait too long to invest else you may miss the bus!
RAJESH asked, Dear Sailesh Can i invest in bsl mid cap via sip for long term or shall i go for sundram mid cap
Sailesh answers, hi, you can go for Sundaram Midcap via the SIP route. Keep monitoring the scheme's performance to ensure that you are no caught on the wrong side.Take help of an expert if you wish to.
pg asked, Any changes in policy related to withdrawl post maturity in investment funds like PPF,LIC etc.
Sailesh answers, hi, there could be few changes if the Direct Tax Code proposal were to be accepted. Best is to wait for the budget to be presented for more clarity. If you have investments to be made in PPF for this financail year, you can go ahead and do it. The changes if any will be applicable for the next financial year.
skr asked, hi sailesh, i have sip's going on since past 5 mths now with hdfc equity(4k), hdfc top 200 (4k), hdfc tax saver (3k), fidelity tax advantage (3k), sundaram select mid cap (5k), franklin flexi cap (4k) & fidelity equity (5k) is this a good portfolio? would you recommend any additions or deletions or replacement to this portfolio.. also i am investing 2k in post office RD.
Sailesh answers, hi, so many schemes already! No more schemes should be added. your portfolio is quite good. Continue with your SIPs. RD is also a good option, continue with the same.
Umesh asked, Hi I have invested in Birla Sun Life Tax Relief 96 Fund - Div JM Tax Gain Fund - Gr Reliance Tax Saver Fund - Gr SBI Magnum Tax Gain Fund - Div Sundaram BNP Paribas Tax Saver - Gr and continue to invest. What is your though on this
Sailesh answers, hi, hold Sundaram and Birla Tax Saver. Rest you should redeem.
Suresh asked, Dear Sailesh, I am worried about Direct Tax Code Bill 2009 because it may end our tax benefit on Housing Loan. It will impact may borrowers. Any guess will they allow Housing loan as deduction in Bill?
Sailesh answers, hi, yes if the sops on housing loans go it will be a big dampner on the home loan indusry. There will be no incentive for people to take home loans. I am sure if housing loan benfits are withdrwan, some sops will be doled out in some form. If you are plannig to take a home loan, wait till the budget day. Get some clarity and then take the loan.
bharat asked, hi shailesh ji, please give us some idea how the performance of equity funds is going to be effected by coming budget.
Sailesh answers, hi, ideally there should be no major impact. If the budget disappoints stock market investors, the markets may fall. But this fall in my view should be considered as an opprtunity to invest. For long term investors, budget should be a non-event.
skr asked, i have invested 20k in birla sun life tax gain dividend scheme at the peak of sensex levels of 21k at NAV 162. today the fund value is in the mid 80's.. in any case I can't redeem before 3 yrs so shud I invest 10k - 15k more in it at this price levels to average out the NAV or shud I invest this 10-15k elsewhere?? what wud you recommend..
Sailesh answers, hi, I would advise you to invest in Fideltiy Tax Advantage Fund to diversify your portfolio and reduce your risk further.
Sach asked, Hi Shailesh, is it a good time to invest in infrastructure funds at this time. Can you please name a few good funds for infrastructure sector.
Sailesh answers, hi, I am not in favour of infrastructure funds as these funds restirct the choice of sectors for the fund managers. When the going is good for the infastruture sector, this fund can give more than average returns. However,if the infastructre related sectors fall out of flavour, then it will be dificult for this fund to make moeny. Its always better to invest in diversified equity funds which will invest in infrastructure related sectors if they hold potential for the future though the exposure will be less compared to a dedicated infrastructure fund.
jalpa asked, i have a small saving of rs. 1 lakh which i want to invest for long term how i shd invest?
Sailesh answers, hi, if you are willing to invest for 5 years and more and willing to take risk, then equity funds are the best option for you. If you are a moderate risk taker then you can divide the amount of Rs 1 lakh into 2 parts - invest Rs 50k in equity funds and the balance Rs 50k in bank fixed deposits.
Sailesh says, We seem to have run out of time. I thank you all for participating in the chat. If you have any further queries, you can post them to me at : sailesh.multani@rediffmail.com
