Ask Investment Questions

Investment is the backbone of financial planning. So if financial planning is battle training, investment is the Kargil. This is an ultimate practical experience and while doing this question or query is bound to surface. Hence this is the page where I have collected the common investment questions that arise in every once mind. You are likely to get solution to your query here or else ask me through the comments section.

Investment Questions Ask Investment QuestionsInvestment Questions:

  • Should I take loan & invest in Stocks?
  • Are Company Fixed Deposits Safe?
  • What are ETF & which Indian ETF I should Invest in?
  • How much I save for my goals?
  • How to get good returns through futures & options?
  • What about investments made in IPO.
  • What will happen if we are caught in spiral like Japan?
  • What should I expect from my Bank Fixed Deposits?

Leveraged Investment

Question: My Friend who’s a stock broker, advising me to purchase some stocks as stock markets is at very attractive levels? As I don’t have enough money so he’s told me to get a personal Loan. I can pay EMIs easily, but is it advisable?

This is not a friendly advice. Either your friend wants to earn brokerage out of your risk or he’s also not that equipped with knowledge to advise you on financial matters. Stock market is one of the most risky asset classes at least for short term where you can earn or lose the fortune. But even if you want to stay invested for long term and you are comfortable in paying the EMIs then also I would not advise you to enter this investment by taking Loan. No one can guarantee you returns in stock market. Personal Loan is among the costliest Loan available as bank doesn’t ask for any security or collateral along with it. It’s Interest rate varies from 16%-20%p.a. As there’s no guarantee in Stock market so it’s very risky to take loan and invest. Moreover there’s a condition attached with personal Loan that this money should not be used for Stock market Transactions. I advise you to start a SIP in Equity Diversified Mutual Funds with the amount you are comfortable paying as Loan EMIs. This will help you in building up the corpus and also satisfies your desire to enter into stock market.

Company Fixed Deposits

Question: I want to invest in company fixed deposits which are safe and good to invest with fairly good return. May I request your good self to suggest the name of safe company for investment? Period of investment is 3 year.

There’s no company which I can call as safe. Fixed deposits are unsecured loans that companies procure from general Public. If a company defaults and goes bankrupt, fixed deposit investors will be paid second last i.e before Equity Investors. But still you can check those companies which have good rating by credit rating agencies. Rating does not make company deposits safe but at least it helps in gaining confidence on the soundness of repayment capacity. There are some Government companies also which issues FDs. You can consider those also.

ETF or Exchange Traded Fund

Question: Can you please provide me an update on ETF…. What is ETF? How much return do we get? For someone at my age of 25 it is right time for me to invest in ETF? Which ETF should I invest for long term?

ETF or Exchange traded funds are passive funds which follows some particular index be it Sensex or CNX 500. These funds are similar to index funds with only difference that these are listed on exchange – so you can also do transaction any time in the day rather than waiting for end of the day. Returns in ETF are directly linked with index performance so if Sensex will give 12% return in year – you can also get the same amount. My suggestion as India is still a growing economy – there is a scope for fund managers to beat index. So you should make your portfolio through 3-4 diversified equity funds.

How much one should save

Question: How much percentage of my total Income should one invest and in which financial instrument considering children education and retirement planning?

Actually percentage of income going in goals depends on once age & type of asset class you are choosing. If someone is around 30 years & invest in equities – approx 15% income will be sufficient to achieve these basic goals but he is investing through debt may be 25% of income is needed. But if someone is close to 40 the he needs 25% through equity & 35%-40% in case if debt. But as I said other factors like Job security, other goals also determine the quantum of investment.

Future & Options

Question: Please tell me about how to invest in Futures & Options. How I can earn good returns from it.

Future and options are most common “Derivatives”. Derivatives are financial instruments that derive their value from an ‘underlying’. The underlying can be a stock issued by a company, a currency, or a commodity like gold etc. The derivative instrument can be traded independently of the underlying asset. As per most famous investor “Derivatives are instruments of financial mass destruction”. Why he said this – because derivatives are leveraged instrument & very risky for any investor. Institutional players use these Instruments for hedging their positions but retail investors use them for speculation. Assume that you have capital of Rs 50000 – that you used to buy a future of x company by paying 25% margin. Now if particular stock(underlying security) will rise by 10% in a month you will gain Rs 20000 on your portfolio or 40%. Now think if it goes down by 10% – as retail investor don’t have understanding or control over their investment; they soon lose their capital.

IPO or Initial Public Offer

Question: I have 300 shares of Jsw energy, which is received at the time of IPO offer. I want to know about the future of this share from the point of view of as an investor, I am not a trader. Please give the expert opinion.

Investor often thinks IPO is a good way to make QUICK money and gets attracted towards it. It is true that few of the companies who came up with an IPO have done well but it is not easy to pick the right ones. Do you remember Reliance Power IPO in Jan 2008 & same happened with other power & infrastructure IPOs. Investor thinks that IPOs are good Investment Vehicle but in reality they are against investor’s interest as they arrive in market when promoters are sure that they will fetch good premium. Do you know BSE IPO index which was launched in August 2009 is down by 9% & in the same period Sensex has given more than 25% return? One should stay away from IPOs or be very choosy.

India Vs Japan

Question: What will happen if we are caught in spiral like Japan i.e. correction of 80% & still bleeding though Japan’s companies are not bleeding then why the Nikkei is not giving the returns? I hope u must be getting what i wanted to ask. Please do clarify why we will go on making new highs on index although with ups n downs

There are 2 reasons for what happened in Japan- first when their market topped it’s valuation was almost 5 times of average. Their PE was approximately 100 at that time. Second Japan is now a developed country & in last 2 decades their GDP growth is 2-3% max. Hope it answers your concern. India is still growing economy and the best is still to come. Next 10-15 year will be Golden years for India – you will like to sit out & watch the game or would you like to participate.

Bank Fixed Deposits

Question: What are the historical real returns on Bank Fixed Deposits in India? When will they turn positive?

Real rate of return is when we remove adjust normal/nominal rate of return (like 7.5% on FD or 8% on some post office scheme) is adjusted for inflation. Normally bank interest rates gives close to 1% of real rate of return but if consider taxation actually we are making losses. Last 2-3 years were pathetic for a debt investor as real rates are negative – even RBI is concerned regarding this. India is a growing economy & inflation will always be higher due to demand coming from public – one must hold equities & real estate to take benefit out of it.

In Case you have questions related to investments ask in comment section.

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{ 152 comments… add one }

  • Manikaran Singal June 4, 2011, 3:39 PM

    Hi hemant!!

    i Like Q 1 and Q 2. As making investments with someone needs trust factor since money is involved . generally people trust more on their friends and accomplices and end up making such decisions that may effect there financial future very badly. It’s good that the person has raised query to you otherwise he could be in a big mess.
    and as far as Company Fixed depsoits are concerned, these are normal question these days .As Banks are going strict on giving loans and moreover in the increasing rates scenario loan from banks prove to be costly to many corporates..so taking loan ( in the shape of FDs) from general public at 1-2 percent higher than Bank FDs looks easy money for them .But Invstor should look at the Inherent Risk also. One should always go with rated Debts or atleast look at the balance sheet position of the company before getting into any of such product.
    Great going Hemant :)

  • Bejoy June 4, 2011, 5:13 PM

    Mr Hemant,

    Can u suggest some good investment schemes. i have been investing in SBI MF, Magnum Equity, SIP. It is going terible. Almost all MFs are doing terrible. So u mean to say invest more in shares and commodities directly?? which are the schemes a person who has already enough insurance and converage and has about 60k every month to roll, should invest in?of course apart from PPF,NSC,MFs….

    • Hemant Beniwal June 5, 2011, 9:27 PM

      Hi Bejoy,

      Will suggest you to have a proper portfolio.

      “Almost all MFs are doing terrible.” I think it is a good news not bad. Market have not performed much in last couple of years & it is a great time for long term investors to accumulate through equity mutual funds. This is the reason I keep saying “Investment is a Mind Game”.

  • ANIL KUMAR KAPILA June 6, 2011, 10:14 AM

    I have observed that no adviser gives advice to invest in any UTI Mutual Fund.However after doing my own research I have started SIPs in UTI Opportunities Fund.I am getting decent returns in this fund whereas my returns in Reliance Growth Fund where I started SIPs around the same time about a year back are still negative and I am thinking of exiting this fund.

    • Hemant Beniwal June 9, 2011, 1:44 PM

      Hi Anil,
      Good to know that you are doing your own research & performance wise UTI opportunities is a good fund. This is an aggressive multicap fund – it had a poor start when it was launched as most of his investments were in midcap at that time. Advisor can’t advice you every fund which is available or fund that were best performing fund in 1 or 3 years. Every advisor develops a certain criteria & if that particular fund fits there – he will suggest to clients. It’s not in my radar as there are other multicap funds that fit better in my criteria. Regarding Reliance Growth – undoubtedly this is one of the best performing fund of Indian Mutual Fund history but none of our clients have allocation in this fund as this again not fits in our criteria of mid cap funds.

      • ANIL KUMAR KAPILA June 9, 2011, 7:25 PM

        Thanks Hemant.I am curious to know the criteria you use for selecting large cap funds,midcap funds and multicap funds for a portfolio.I would also like to know the methodology you use for selecting funds for core and satellite of the portfolio and typically how many funds you recommend in each part.I am also keen to know the fund houses in your radar.Is it advisable to invest in funds which have been around for about three years like HDFC Midcap Opportunities and ICICI Prudential Focused Bluechip Fund?

  • Vijay Kumar June 6, 2011, 2:24 PM

    Hello,

    I want to know your advice on selecting debt funds. Is it good to choose an actively managed income fund such as BSL Dynamic Bond Fund irrespective of the market conditions or move between ultra short term, short term and long term funds depending on the interest rate changes? I feel timing is not really difficult in debt market when compared to equity and hence the latter option is more rewarding for the investor. Please comment.

    regards
    Vijay Kumar

    • Hemant Beniwal June 9, 2011, 2:08 PM

      Hi Vijay,

      Let’s first come to second part of question regarding timing in debt market – timing in debt market is equally difficult if not more than equities. Plus moving in & out is not much rewarding. If you want to have the right type of product – match your horizon with time horizon of product or particular scheme. So if your horizon is 1-2 year choose short term funds – if your horizon is long term & preference is debt go for income & gilt funds. Dynamic funds like BSL Dynamic Bond Fund can be good if fund manager is able to do the timing & beat other fund managers who are equally competent.
      But in India there is big problem with long term debt funds – most of the fund managers are managing them as an opportunity fund rather than sticking to the mandates. That’s the reason there are big gaps in performance of one fund to other. In 2008 a long term gilt fund of Birla gave 6% returns but gilt fund from ICICI gave 46% returns. In 2009 fund from Birla gave 17% return but ICICI fund was negative by 3%. ;)

  • Punit Sethi June 6, 2011, 5:31 PM

    Hi Hemant
    It has been over a month since I first reached your website and as a result of it, I have now started with SIPs. Would like to thank you earnestly for bringing in the knowledge and awareness.

    I have a question:

    Lets say I start an SIP on a Mutual Fund X and it goes wonderfully well for 3 years. At this point, lets say due to some reason (like change of Fund Manager), the MF performance starts to degrade. What shall be one’s strategy at such a point –

    1. Stop SIP installment but keep invested?
    2. Withdraw from the investment? If one withdraws, how to go about investing it again?

    I can understand that one may have to look on case to case basis – but is there a general approach you would suggest as such?

    Thanks!
    Punit Sethi

    • ANIL KUMAR KAPILA June 7, 2011, 9:28 AM

      Hi Punit and Hemant
      This is a very good question.I also have a somewhat similar question.All investment advisors advise that even after starting SIPs in highly performing mutual funds investors must review the performance of different funds forming part of their portfolio on a regular basis at least once a year.My question is what to do if the investor finds that even for remaining invested in the funds for more than two years the performance of the funds which had given good returns in the past five or ten years does not show any sign of improvement.
      For example Reliance Vision and Reliance Growth which form part of the list of funds with good SIP returns in the past are consistently performing poorly when compared to similar schemes of other fund houses.

      • Ravi Tallam June 8, 2011, 12:18 PM

        Hi Hemanth,

        I also a have question related to SIP.
        What is the best time to switch from one fund to someother fund in the same AMC?
        a) is it when both funds are down when the overall market is down?
        b) both funds are up when the overall market is up?

        Note : switch from one fund to another is needed because that fund is not doing well relatively compared to the other.

        • ANIL KUMAR KAPILA June 8, 2011, 4:07 PM

          Hi Ravi
          I don’t understand why you want to switch between two funds of the same fund house.The performance comparison should be done between similar schemes of different fund houses and not different schemes of the same fund house.You can not compare apples with oranges.

          • Ravi Tallam June 8, 2011, 6:35 PM

            Hi Anil,

            Thanks Anil. That is because switching between funds under same AMC doesnt attract any commision/fine.

            The fund(Micro Cap) which I have invested is not performing and another fund from same AMC which may be different(Mid Cap and Small Cap) is performing relatively better. In the above case I can switch for better returns in the long run considering it will perform consistently better than other.

            Considering above scenario I want to know when it is better to switch. Is it now when sensex is around 18K + or when sensex reaches 20K+ or when sensex goes down to 16K +.

            Hope I explained better this time.

        • ANIL KUMAR KAPILA June 8, 2011, 7:46 PM

          Hi Ravi
          It will help me if you can tell me the name of the fund house and the schemes you want to switch.Since there is presently no entry load it is always better to exit from the nonperforming fund and invest in a similar better performing scheme of a different fund house.Moreover it is not clear whether you are investing through a monthly SIP or lump sum.As for as SIP is concerned you don’t have to bother about the timing.

          • Ravi Tallam June 9, 2011, 2:15 PM

            Hi Anil,

            The fund is Sundaram SMILE fund which I had invested on SIP basis. SIP is stopped now and I want to switch to Sundaram select small and midcap fund which is doing better.

            Thanks Again

        • ANIL KUMAR KAPILA June 9, 2011, 7:35 PM

          Hi Ravi
          If your SIP has already stopped where is the question of switching.Immediately start a new SIP in a fund which you think has a better performance.Don’t confine yourself to only one fund house.

      • Manirul June 4, 2012, 3:16 PM

        Good Q, every financial advisor saying that MF investment should be long term and same time they are saying keep watching the performance, so after reviewing one can find that the fund is not performaing last one or two year (say), then what will one do? withdrawing ? if yes, there is no long term investement. so saying long term and keep watching performance at a same time is really a illution created by financial advisor.
        We have to live with it.

        • Hemant Beniwal June 5, 2012, 8:38 AM

          Hi Manirul,
          If performance was the only reason someone bought a fund definitely he need to keep a hawk eye on that – but I don’t think that’s the right way to build portfolio.

  • Sumeet Gupta June 8, 2011, 9:39 AM

    My 2 cents worth of take on Reliance Growth, since i have this fund for last one year and it has been performing consistently bad. The fund has a good track record, I am keeping a watch on it for another 6 months or so. In case it still performs worse than the category, i will stop my SIP in it. But i think Reliance Growth deserves a little leeway since it has been a consistent performer otherwise.

    • ANIL KUMAR KAPILA June 8, 2011, 4:11 PM

      Hi Sumeet
      I agree.I have also adopted the same strategy for this fund.

    • Hemant Beniwal June 9, 2011, 2:13 PM

      Hi Sumeet,

      I remember we discussed on your funds few month back.

      If you think Reliance Growth is part of your mid cap portfolio you can immediately come out of that.

      • Sumeet Gupta June 10, 2011, 12:43 PM

        Thanks for the advice Hemant. Since we last discussed, I heeded to your advice and got rid of SBI Magnum Contra and Sundaram Tax saver, and increased SIP in HDFC Top 200. My portfolio now is:-

        1. HDFC Top 200 3000
        2. Reliance Growth 2000
        3. IDFC Premier Equity A 2000
        4. HDFC Prudence 4000
        5. FT Bluechip fund 2000
        6. ICICI Pru Discovery 2000
        7. Fidelity Tax saver 1500

        Since i have IDFC Premier Equity and ICICI Pru Discovery to look after my mid and small cap segment, i thought of allowing Reliance Growth a little leeway, by keeping an eye on it for another couple of quarters may be.

        Your thoughts please!

        • ANIL KUMAR KAPILA June 10, 2011, 1:51 PM

          Hi Sumeet
          I think you should follow Hemant’s advice and replace Reliance Growth by a performing large cap fund.

          • Sumeet Gupta June 11, 2011, 10:30 PM

            Thanks Anil. But why would you advice me to stop it immediately? I admit that Reliance Growth is really testing my patience. But as i said, this has been one of the few performing funds from Reliance. I would still want to give it a go, at least for a few more months. As far as my portfolio is concerned, i think i’ve sufficiently diversified my portfolio and tried to cover my bases to offset any potential losses from Reliance growth. When we say that an equity MF is a long term investment, probably a minimum of 5 year horizon, do you think we should be impatient enough to get out of a fund because it’s not been performing for 1 year? Awaiting your comments :)

          • ANIL KUMAR KAPILA June 12, 2011, 10:50 AM

            Hi Sumeet
            For your information I am also invested in Reliance Growth.I just repeated what Hemant had advised.If you want to keep it, it is your choice.I am only telling you that there are many funds performing much better than Reliance Growth.

            • Hemant Beniwal June 12, 2011, 6:57 PM

              Hi Guys,

              I think I have to stop recommending funds – I said you should exit Reliance Growth if you think it is a midcap. Actually size of this fund is Rs 7000 crore and almost 50% assets are in large cap. Take your own decision.

              • ANIL KUMAR KAPILA June 12, 2011, 8:12 PM

                Hi Hemant
                I think easy availability of too much information and free advice adds to confusion in the minds of the investor. I have seen a lot of people asking questions regarding mutual funds on business channels.From the type of questions asked it becomes clear that most of the people don’t have any idea of mutual fund investing.The so called experts add further to the confusion.Then there are websites which provide lists of best mutual funds for investment based on their weekly and monthly ratings.Some advisers ask investors to regularly monitor the performance of their funds.This means weekly or monthly monitoring for some investors.

                • Sumeet Gupta June 15, 2011, 2:57 PM

                  Hello Anil,

                  Apologies if you think that i had questioned your wisdom in advising me. My intention was never that, it’s just that i was confused and so kind of got into discussion with you. Yes, i am still naive when it comes to Mutual Funds, but it is a work in progress :). I believe i’ll be better off may be a few months down the line.

                  Hello Hemant,
                  you’re doing a good job. don’t stop advising funds just because of a one-off case :)

                  Cheers!

  • ANIL KUMAR KAPILA June 11, 2011, 7:53 PM

    Hi Hemant
    Recently I read a very interesting letter in one leading personal finance magazine.The author of the letter has made some observations which I would like to share with you to have your comments.
    The advice imparted by most financial advisers is to have a core portfolio which should have large cap funds for stability.However it is seen that over the years best performing funds are from Mid Cap and Small Cap and Multi Cap categories.
    Over the years FMCG and Healthcare funds have consistently performed better than Large Cap funds yet they don’t find any place in the core of a portfolio.
    The definition of long term is different for different advisers.
    Investment also carries an element of luck.
    Some of the large cap funds recommended by most advisers have consistently given poor returns but are still on the radar of advisers.

    • Hemant Beniwal June 12, 2011, 7:07 PM

      Hi Anil,

      I may agree with this guy on few of the points. Long term is different for everyone, core portfolio have a different definition etc etc.
      One thing is also clear that no one can consistently find out-performers in the market but I shall tell you that this exercise of finding best funds will contribute less than 10% in once investment success. ;)

      But this statement shows this guy is naive “Over the years FMCG and Healthcare funds have consistently performed better than Large Cap funds yet they don’t find any place in the core of a portfolio.”

  • Fautam Prashant June 13, 2011, 8:51 AM

    Hi,

    I have started investing in 2 mutual funds- (1) Reliance Regular Savings Fund & (2) Miracle asset India opportunity. I will invest 2 thousand every months for the next 5-10 years. How is my investment? Should I continue?

    Thanks

  • fergi_acc June 15, 2011, 1:28 PM

    hi hemant,
    my age is 27 ,unmarried and i want to go for my first mutual fund investment.

    1)I am looking to choose HDFC TOP 200 with sip of Rs 2000 /Month for long term capital gain .
    2)Also to save tax i need to invest around 47k and hence planning to go for ELSS (thats is HDFC tax saver fund)

    My question is that should i go for equity fund (HDFC top 200) or HDFC tax saver ?
    And second one is tax saver fund returns low as compare to equity fund?
    Please suggest and clear my confusion!

    • Hemant Beniwal June 16, 2011, 9:15 AM

      Hi Fergi

      It is an excellent decision to start your SIP as such young age – it will definitely help you in building your wealth in long term. Even you fund selection is good for a new investor – HDFC top 200 is a large cap with consistent performance over a long period of time. Even HDFC tax saver is a good fund but I will suggest you to go for Fidelity Tax saver – so you can get some extra diversification across asset management companies.
      ELSS are also equity funds & very similar to diversified equity funds – if you check performance in last 5 years ELSS have outperformed diversified equity funds & in 3 years opposite happened. It’s like 2 champions running in a race – both are good but one is bound to come second.

      • fergi_acc July 5, 2011, 11:11 PM

        Thanks hemant for instant and helpful reply..!
        well i have some doubts also:
        1)I am little bit confused whether to go for PPF or a Tax saver fund for saving tax? Since Tax saving is different than wealth creation and obviously wealth creation should be my goal at this age.
        2)Is it better to buy fund online through company or through some agent ?I know online we donot have instant guidance to change a mutual fund.
        3) My agent is a freelancer yet he is pursuing me to buy birla sunlife platinum guaranteed NAV ulip….is it better tham MF for long term say 20 years.
        4)Iam confused about forthcoming DTC code .Will Tax saver fund buy at this time will also be taxable after three years (lock in period).

        Your detail response would be highly appreciative.

        • fergi_acc July 15, 2011, 5:05 PM

          Any Reply????

        • Hemant Beniwal July 15, 2011, 5:25 PM

          Hi Fergi,
          Please find inline reply:
          1)I am little bit confused whether to go for PPF or a Tax saver fund for saving tax? Since Tax saving is different than wealth creation and obviously wealth creation should be my goal at this age.
          >If you are young go for tax saver funds but still open your ppf account with small amount – as there is 15 years lockin. (4-5 years you can add minimum payments in ppf)
          2)Is it better to buy fund online through company or through some agent ?I know online we donot have instant guidance to change a mutual fund.
          >Guidance is really important in MF as it is a dynamic product. Try to find a good advisor in your vicinity. There is no fun in investing through online platform if you are not getting individual advice.
          3) My agent is a freelancer yet he is pursuing me to buy birla sunlife platinum guaranteed NAV ulip….is it better tham MF for long term say 20 years.
          > Avoid
          4)Iam confused about forthcoming DTC code .Will Tax saver fund buy at this time will also be taxable after three years (lock in period).
          >Don’t be confused go ahead & invest – we will talk about DTC in March 2012.

          • fergi_acc July 22, 2011, 8:55 AM

            Thanks Hemant..!

  • ANIL KUMAR KAPILA June 16, 2011, 12:18 PM

    Hi Hemant
    I have been investing in mutual funds for the last three years through SIPs.So far my investments have been purely on the advice of the relationship managers of the banks.Now that I have started doing my own research, I have found that my portfolio has some non performing funds.Hence I have decided to have a new portfolio.I have shortlisted the following funds.
    1.ICICI Prudential Focused Bluechip Equity Fund- Equity Large Cap.
    2. HDFC Top 200 – Large and Midcap
    3. UTI Dividend Yield – Large and Midcap
    4. ICICI Prudential Dynamic – Large and Midcap
    5. HDFC Equity – Equity Multicap
    6. HDFC Midcap Opportunities – Mid and Small Cap
    7. Birla Sunlife Dividend Yield Plus. Mid and Small Cap
    8. UTI Master Value-Mid and Small Cap
    The only problem I see with this list is that many funds are from the same fund house.I know you always stress that we must diversify among fund houses also.If I select funds from other fund houses which have comparatively lesser performance , the yield of my portfolio may be adversely affected.I would like to have five to seven funds in my portfolio.Please give your comments on my selection of funds and your recommendation.

  • ANIL KUMAR KAPILA June 17, 2011, 9:31 PM

    Hi Hemant
    I have observed that sometimes mutual fund advisers give ridiculous examples to impress the investors about the returns available from long term investing.One typical statement which I came across in a magazine says that a reasonable amount of Rs 5000/- invested in equity mutual fund for the last thirty years would have given the investor now a return of Rs 3.5 crores.My humble question is how many of the mutual fund investors would have found Rs 5000/- a reasonable amount 30 years back.I would like to mention here that in the year 1975 the basic salary of an engineer in a leading public sector undertaking was around Rs 1000/- with an annual increment of less than Rs 100/-

    • Hemant Beniwal September 18, 2011, 7:07 PM

      Hi Anil,
      You have rightly pointed out even Rs 1000 was a huge amount 30 years back but due to inflation & economic changes current incomes are very high. I think these advisor are just trying to show you a big picture about future by comparing it with past.

  • ANIL KUMAR KAPILA June 18, 2011, 8:21 PM

    Hi Hemant
    First of all I must thank you for replying to a lot of my comments.Your replies have really helped me in clarifying many aspects of investments in mutual funds.However I keep on troubling you with questions which keep on cropping in my mind.
    Most of the advisers are in favour of adopting a core and satellite approach for building a portfolio.Core of the portfolio is supposed to provide stability and satellite a scope for higher growth.It is said that core should form 70 to 80 percent of the portfolio and it should have only Large Cap and Large Cap and Mid Cap funds in it.My question is whether it is enough to have only one Large Cap and one Large Cap and Mid Cap fund in core or we should have more funds in core for the purpose of diversification.
    Satellite will have exposure to Mid Cap and Small Cap ,Multi Cap , Sector Funds , Thematic Funds , Gold Funds and other funds.Even if we take one fund out of each category , the number of funds in the portfolio will be larger than what is generally recommended. I would like to have your take on this.

  • Dinesh June 27, 2011, 3:11 PM

    Hello, I am 30, married with no kids as of now. After paying all my loan EMI’s & household expenses I have around Rs. 12000 spare in my kitty. Currently my monthly investments are,
    PPF – 1000, HDFC Tax Saver – 1000, BSL Taxgain’96 – 1000, Gold ETF – 1000, Reliance Eq opportunities – 2500.
    Now I am planning to invest in HDFC Top 200, DSP BR TOP 100 & Franklin India Prima fund. Plz suggest.

    • Hemant Beniwal June 27, 2011, 9:49 PM

      Go Ahead.

      • Dinesh June 28, 2011, 10:58 AM

        Thank you very much HEMANT. I am a regular reader of your informative articles & it really has helped me to understand financial planning to certain extent. Need small suggestion,

        – Shall I invest whole 5000 in single fund house or again split it in to 2 or 3?
        – To save tax under 80 CCF, should I opt Infrastructure bonds also to make my portfolio more diversified.
        – One year back I bought a 2BHK flat so as you are aware initially the interest component is more. What I am thinking of is to start one recurring of around 4-5K/month and at the end of the year transfer the whole amount to my loan account since as per my knowledge I get rebet upto 1.5 L per year on home loan interest apart from 80C. (I am also expecting a pay rise this month by atleast 6-8K min.)

        • Dinesh June 28, 2011, 11:04 AM

          Sorry.. by mistake I mentioned about the interest component. Actually as I know the whole top-up amount will go in Principal so if I have 1L (80C) bucket little empty then can I opt for it or shall I invest in some other instrument & keep the home loan going as it is.

  • Vijendra Singh July 2, 2011, 7:42 PM

    Hi Admin,

    Request you to kindly review the below SIPs of mine and provide your feedback/suggestions.

    Policies Amount SIP Mode
    Franklin India Bluechip, 2000 Monthly
    BSL dividend yield, 1000 Monthly
    BSL frontline equity, 1000 Monthly
    HDFC Tax Saver, 2000 Monthly
    HDFC Equity-Growth, 1000 Monthly
    HDFC TOP 200, 1000 Monthly

    Thanks,
    Vijendra Singh
    Age: 27 Years
    Mumbai

    • ANIL KUMAR KAPILA July 17, 2011, 2:01 PM

      Hi Vijendra
      Your selection of funds is good.However it is always preferable to have funds of different fund houses in the portfolio for diversification.

  • ANIL KUMAR KAPILA July 28, 2011, 10:11 AM

    Hi Hemant
    I am a little confused as for as the investing in equity mutual funds is concerned regarding the mode of investment.The questions in my mind are SIP or lump sum,SIP or STP.I have come to know your views from your recent comments.I will give you my own example. I invested lump sum of Rs 50000/- each in four top equity mutual funds of different fund houses around eight months back when the sensex was around 21500.The present value of all the four funds is much lower than Rs 50000.My question is whether I have to wait for sensex to again touch the level of 21500 which is unlikely in near future to break even or it can happen before that.
    I have some lump sum parked in my savings account.I would like to invest in five mutual funds of different fund houses where my SIPs are already running. Is it possible to use STP route to invest without parking the amount in five liquid funds of different fund houses ?

    • Hemant Beniwal September 1, 2011, 9:32 PM

      Hi Anil,
      For STP you have to invest the amount in liquid funds.

  • deepak sharma September 6, 2011, 11:32 PM

    dear sir
    i gone through your site it is so knowledgeable , sir i had a question
    i dont have not a single money investment as i am confused wher to invest
    i want a safe returns to achieve my financial goals
    i want to invest atleast 20 thousand per month my age is 27 and recently married how much in insurance , monthly investments in which schemes mf, rds, fd in market ,,,please guide me with company also
    regards
    deepak sharma

    • tinks October 11, 2011, 6:24 PM

      Hi Deepak,
      Will suggest you to have a Good Financial Planner who can understand your requirement and will suggest you on the basis of that.

  • ANIL KUMAR KAPILA September 7, 2011, 6:51 AM

    Hi Deepak
    Please read the post – Best Mutual Fund For SIP.

  • Anand September 8, 2011, 8:15 PM

    Hi Hemant,

    Your website is really helpful for the commoners like me. Thank you so much.

    I want to have 6lac in five years for my marriage. I go the idea of saving every month through recurring deposit. Is that OK?
    Please advise me.

  • ANIL KUMAR KAPILA September 9, 2011, 5:28 AM

    Hi Anand
    You can consider investing through SIP in a balanced fund like HDFC Balanced Fund.

  • Anamika Shah September 13, 2011, 3:27 PM

    Hi,

    I’m a novice to financial investments. Have a package of 6L;

    I want to know how much I need to invest so that I can save tax deductions and whether to go for PPF or a Tax saver fund for saving tax (with hw much to invest in it)? Since Tax saving is different than wealth creation and obviously wealth creation should be my goal at this age.

    Guide for the same.
    Thnks n regards,
    Anamika

    • ANIL KUMAR KAPILA September 13, 2011, 6:34 PM

      Hi Anamika
      From next year you will not get any rebate in income tax from your investment in tax saving funds and your money will remain locked in these funds for three years. You can invest a maximum of Rs 70000/- in PPF per year.
      Investment in equity mutual funds through SIP route is the best approach for wealth creation.

  • ANAMIKA SHAH September 17, 2011, 12:57 PM

    I DIDNT GET YOUR POINT. YOU MEAN TO SAY THAT TAX SAVING WONT BE THERE VIA PPF??

    PLEASE ELABORATE.

    • ANIL KUMAR KAPILA September 17, 2011, 2:09 PM

      Hi Anamika
      Yes you did not get my point. What I have said is that ELSS funds will be treated like normal equity mutual funds and no tax rebate will be available on investments in these funds.

  • Deb October 3, 2011, 10:39 PM

    Hi Hemant,

    Need your valuable advise to

    I am 35 years with a housewife and 3 years daughter.
    I have taken the following plans annually.
    1. LIC Jeevan Anand – 16000
    2. HDFC Pension plan – 25000
    3.Birla Sun life dream plan – 22000
    4.Icici life time gold – 23000
    5. PPF – 5000 per month.

    I need your suggestion to rebuild my portfolio.
    Please help!

    • tinks October 11, 2011, 6:20 PM

      Hi Deb,
      I would suggest u too close all your insurance plans and will suggest you to take term plan which will cost you less and the amount which is being saved can be invested in mutual funds through SIP for your future goals .
      I will suggest you to continue your PPF account and will tell you to increase it.
      Hope you are not investing for deduction in 80 C .If yes please close it as soon as possible and before closing do take suggestion from a good Financial Advisor.

    • ANIL KUMAR KAPILA October 11, 2011, 6:32 PM

      Hi Deb
      I think you have already asked these questions and these have been replied.

  • Kaverao November 8, 2011, 10:52 AM

    Hi. I need a suggestion. I have a homeloan (from SBI) of INR 20 Lacs. It has a Max gain facility, – that means If I keep some reserve cash in the account, my monthly interest calculation will be done based on the (Loan amount -(minus) Cash in account). So, effectively If I deposit more money in the loan account, acts like prepayment and monthly interest is reduced.
    Now, the question is,- I have 1 Lac surplus cash which I need to manage wisely. IS IT GOOD TO DEPOSIT in HOME LOAN ACCOUNT (and hence reduce the immediate loan interest) OR DEPOSIT IT IN THE PPF ACCOUNT (so in the long term i get more benefit due to compounding of interest)?.
    I know that if I deposit in PPF, i have lock in period. but i may not need that money to be taken out in near future.
    So, PLEASE SUGGEST – whether to DEPOSIT IN PPF or SETTLE the HOME LOAN?. Thanks in advance.

  • Harendra November 9, 2011, 1:35 PM

    Hi Anil,

    I am 27yrs old and I would like to go for investments. Mutual Funds or others. My annual income is INR 8.25 l. Could you please suggest me where to invest. I only have taken LIC jeevan policy of one lakh p.a.

    Thanks.

  • ANIL KUMAR KAPILA November 9, 2011, 7:43 PM

    Hi Harendra
    If your investment horizon is more than five years you can consider investing in diversified equity mutual funds. For selection of funds read the post – Best Mutual Fund For SIP.

  • Kaverao November 9, 2011, 9:21 PM

    Hi. I need a suggestion. I have a homeloan (from SBI) of INR 20 Lacs. It has a Max gain facility, – that means If I keep some reserve cash in the account, my monthly interest calculation will be done based on the (Loan amount -(minus) Cash in account). So, effectively If I deposit more money in the loan account, acts like prepayment and monthly interest is reduced.
    Now, the question is,- I have 1 Lac surplus cash which I need to manage wisely. IS IT GOOD TO DEPOSIT in HOME LOAN ACCOUNT (and hence reduce the immediate loan interest) OR DEPOSIT IT IN THE PPF ACCOUNT (so in the long term i get more benefit due to compounding of interest)?.
    I know that if I deposit in PPF, i have lock in period. but i may not need that money to be taken out in near future.
    So, PLEASE SUGGEST – whether to DEPOSIT IN PPF or SETTLE the HOME LOAN?. Thanks in advance.

    • ANIL KUMAR KAPILA November 10, 2011, 6:01 AM

      Hi Kaverao
      Normally it is better to be debt free before thinking of any investment. Moreover you can not deposit more than Rs 70000/- per year in your PPF account. There is no simple answer to such question as many more things have to be taken in to consideration.

      • Kaverao November 10, 2011, 9:26 AM

        Thank you Anil. “many more things have to be taken in to consideration.” – Can you pls let me know top few of them?. (Just to get a feel of my thinking is going in right direction or not?!.).
        Again, thanks for replying.

    • ANIL KUMAR KAPILA November 10, 2011, 11:39 AM

      Hi Kavero
      You have mentioned that you have i lac surplus cash which you want to manage wisely and you have considered only two options. I do not know whether tax implications were also in your mind when you considered these options. You are also keen to benefit from compounding. From long term investment point of view investment in diversified equity mutual funds has the potential to give higher returns. I do not know about your risk appetite. If you can take risk then you can also consider investing in mutual funds.

      • Kaverao November 10, 2011, 2:30 PM

        Thanks Again, Anil.
        Some more info- I have mutual funds SIPs of 7K/month ((each of them 1K ) on DSPBR Mid & samll cap, BSL mid cap, Reliance Gold savings fund, LICMF Opportunities, LICMF Growth, SBIMF) and LIC Pension+ plan (1.5K/month).
        With this 1 lac, my risk apetite is high (ready to take risk for higher gain). I dont have any LIC premiums due till the FEB 2012. No need to worry abt year end tax saving instruments bcoz, have HL Pricncipal to cover 1 lakh tax excemption. Left with at least 10-15K every month after all the commintment is fulfilled.

        Ideally, I am looking for one of these- 1)deposit in PPF (for compunding benefit) OR 2)Home loan pre payment on maxgain acct (to reduce monthly interest) OR 3)Any other instrument which gives me more benefit than about two. Optimistically expecting 20-25%/annum despite current sluggish market condition.

        So, you have mentioned “From long term investment point of view investment in diversified equity mutual funds has the potential to give higher returns”. Can you pls be particular about this?. i.e. if possible some examples of good Mutual funds which are bound to grow despite current market situation which is very dynamic. I know, its difficult to point out one company or fund. But can you pls share some examples?. Thanks in advance.

        • ANIL KUMAR KAPILA November 10, 2011, 7:10 PM

          Hi Kaverao
          First of all I would like to inform you that your expectation of 20-25% annual return in the current market situation is not realistic. I am not aware of any investment which can give you this type of return.
          I do not think that you have a properly diversified equity mutual fund portfolio right now and you can not hope to get decent returns from this portfolio. Moreover you are exposing yourself to high risk by your current selection of funds.
          Please read the post – Best Mutual Fund For SIP for selection of funds.

          • Kaverao November 11, 2011, 9:18 AM

            Hi Anil,
            Thanks for your suggestions. I am going through your post on Best Mutual Fund For SIP and planning to re align my portfolio.
            Also, by 20-25% growth, i meant long term average up to 5 years or more. I think, that is realistic if I hold the fund (I usually do) for more than 5 years?. Pls clarify.
            You said, “Moreover you are exposing yourself to high risk by your current selection of funds.” – I think, you are referring to most of Mid and Small cap funds in my portfolio ? – Pls clarify otherwise.
            Anyway, thanks for finding my mistakes and recommonding better ideas.
            Just another question. How are GOLD funds? Are they good and safe?. Thanks!.

            • ANIL KUMAR KAPILA November 11, 2011, 10:41 AM

              Hi Kaverao
              I can only say that in the long term you can expect a decent inflation beating return by investing in diversified equity mutual funds. Nobody can say for sure how much it is going to be.
              For spreading the risk the portfolio has to be diversified across types of funds as well as fund houses. Normally you should not have more than one fund from a fund house in your portfolio. Large cap and large and midcap funds have comparatively less risk associated with them. Mid and small cap , muticap, thematic and sector funds are riskier funds.
              Obviously if your portfolio is not properly diversified it is more risky.
              To have diversification you can invest upto 10% of your assets in gold.
              All funds carry some amount of risk. No fund can be called good and safe.

              • Kaverao November 11, 2011, 12:21 PM

                Thanks a bunch again. Its getting cleared. I have the gap in Large cap and large and midcap funds. I am interested to fill that gap up now!
                From Hemant’s previous post (suggested by you to go through)- I found the below Large cap funds…
                ===LAGRE====================
                DSPBR Top 100 Equity
                ICICI Prudential Focused Bluechip Equity
                Franklin India Bluechip
                ===LARGE AND MID================
                Fidelity India Growth
                HDFC Top 200
                ICICI Prudential Dynamic .

                I Dont have any fund houses of them except DSPBR. So, should opt one.
                Q1) Can you pls help me to choose one of them?
                Q2) Whata is the significance of Equity Multicap fund? and risk factor of that?
                Q3) Whata is the significance of Equity Value fund? and risk factor of that?

                Sorry to bother you with too many questions. But so far I was struggling to find a blog , and peope who can help me on this front, and only now I am finding it. Grateful to you on the help & suggestions!. Thanks.

                • ANIL KUMAR KAPILA November 11, 2011, 2:16 PM

                  Hi Kaverao
                  You can include these funds in your portfolio :
                  1 ICICI Prudential Focused Bluechip Equity
                  2 HDFC Top 200
                  Please read the post – Types Of Mutual Funds In India.
                  If you go through my comments you will get answers to your questions.

                  • Kaverao November 11, 2011, 2:20 PM

                    Thanks a lot, Anil. Okay, No more questions :-) for now.
                    I will try to re align the portfolio and will update you on that. Will treat you upon getting good profit :-)

                    • Kaverao November 15, 2011, 12:19 PM

                      Hi Anil,
                      So, I am planning to subscribe for a SIP on ICICI PRUDENTIAL FOCUSED BLUECHIP fund.
                      I see 2 options in that fund.
                      1) ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND RETAIL DIVIDEND and
                      2) ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND RETAIL GROWTH

                      Which one would you suggest?
                      Thanks.

                    • Kaverao November 15, 2011, 12:23 PM

                      Hi Anil,
                      So, I am planning to subscribe for a SIP each on ICICI PRUDENTIAL FOCUSED BLUECHIP fund and HDFC TOP 200 fund.

                      I see 2 options in both of those funds.
                      1) ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND RETAIL DIVIDEND and
                      2) ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND RETAIL GROWTH

                      Also in, HDFC, I have 2 options.
                      HDFC TOP 200 FUND – DIVIDEND PLAN and GROWTH PLAN.

                      Which one would you suggest in both of the above fund houses? (i.e. one in ICICI and one in HDFC)
                      Thanks.

                    • ANIL KUMAR KAPILA November 15, 2011, 3:02 PM

                      Hi Kaverao
                      All mutual funds have growth and dividend option. In the dividend option mutual funds periodically declare some dividend which is paid to the investors. After making the payment of dividend NAV of the fund gets reduced.
                      In the growth option no dividend is declared and the NAV of the fund keeps on increasing. Dividend payout is preferred by those investors who need regular income.
                      For the investors who want long term wealth creation growth option is the best. NAV in growth option is always higher than that in dividend option.

                    • Kaverao November 15, 2011, 4:28 PM

                      Thanks.

  • vinod December 17, 2011, 12:24 AM

    Sir,

    I would like to get your advice on Muthoot NCD.

    Name of the Issue : Muthoot Finance NCD – Series II
    Issue Date : 22nd December,2011
    Issue Size : Rs.300 Cr + Rs.300 Cr. Green Shoe Option
    Period : 2, 3 and 5 years

    Interest Rates

    Annual Option : 13%, 13.25% and 13.25% for 2, 3 and 5 years respectively
    Cumulative Option : Double in 5 ½ Years
    Minimum Investment : Rs.5000 and multiples of Rs.1000 thereafter.
    Closing Date : 07th January, 2012

    Regards

    —-Vinod

    • Hemant Beniwal December 17, 2011, 5:12 AM
      • vinod December 18, 2011, 12:20 AM

        Sir,

        Thank you for the reply .But the article was too generic in nature.

        regards

        —Vinod

        • Hemant Beniwal December 20, 2011, 7:46 PM

          Hi Vinod,
          You are right its very generic in nature – how I can advice you something specific without knowing you or your risk appetite. Tomorrow I will add one article – which will again touch on this point.

  • Lokesh Kumar January 3, 2012, 3:34 PM

    Hi, I have this great confussion regarding LIC policy and their returns. I came across this article which is provided below, please let me know if LIC jeevan saral provide 10% guarantee returns and is it true which is mentioned below?

    “Jeevan Saral by Lic of India

    Jeevan Saral by Life Insurance Corporation of India is a best lic policy so far. It has won golden peacock award and it is the most flexible plan ever introduced by Lic of India. Jeevan saral policy is like an endowment plan which is very simple and easy to understand. Jeevan saral policy has various premium payment modes like monthly, quarterly, half yearly and yearly. When we sold our Jeevan saral policy to Preity zinta with a monthly premium of Rs.10210/- she got a 250 times risk cover of Rs. 25,00,000/- and double accident benefit of Rs. 50,00,000/- When the policy matures after 25 years she gets Rs.1,36,51,012/- which is calculated @10% returns. Now in case she wants to stop the policy after the 15th year she can do it without any penalty or surrender charge. Her maturity amount works out to Rs. 44,43,968/- at the end of the 15th year. Also she can avail a loan on this policy from the 3rd year onwards.

    If you are also impressed by the simplicity of Jeevan saral by Lic of India, you can book a policy for yourself. Jeevan saral policy starts from as low as Rs. 250, Rs.500 , Rs.1000, Rs.2000, Rs.3000 and so on… It has no upper limit.

    We recommend Rs.3063/- monthly premium for a working male or female

    Benefit of LIC Scheme:

    LIC Monthly Recurring type Scheme

    This is like a Post office or Recurring Deposit Scheme. You can deposit Yearly, Hly, Quarterly or Monthly (ECS) in LIC scheme

    Maturity received in LIC scheme is Tax Free under section 10-10d of income Tax act.

    You can withdraw partial of full amount if necessary after 10 years.

    The amount deposited in LIC is exempted under section 80c of income Tax act.

    You can continue LIC scheme after 10 years.

    In case of death 250 times monthly premium + Total Premium paid – (1st years premium & Extra premium paid ) + LA if any payable.

    If you forget to take maturity at the end of 10 years, You can get return beyond 10 years in LIC scheme. This is not available in Post office scheme.”

    Regards,
    Lokesh Kumar

    • Hemant Beniwal February 2, 2012, 8:14 AM

      Hi Lokesh,
      Someone is misleading you with these figures – you should not expect more that 6% returns from this policy.

  • Kaverao January 4, 2012, 11:29 AM

    Hi.
    I have a brother living in a villege in costal Karnataka. While earning the main income of reasonable amount from small scale agriculture, he also has a small job earning 5-6k/month which he can invest for future. He has a small family to secure- wife and 2 kids(boys).

    He is looking for a health insurance to cover entire family (as mentioned above) against any small/sevior illness, hospitalization, and any unfortunate instances.

    Can any one suggest an idea to go for an insurance?
    What are the points to consider when buying an insurance? (like claim ration/ coverage.. etc)
    Which brand (like Star health/max bhupa/lombard … ) and insurance scheme is good?

  • ankita January 12, 2012, 9:46 AM

    hi i want to terminate MONEY BACK 20 YEARS INSURANCE POLICY BY LIC as i m suffering from financial problem ….can u help me …without losing my 5 premium what i paid?

  • jp swain January 29, 2012, 2:18 PM

    Dear sir,
    I am very much influenced from your all articles. I am a doctor of 39 years age working in a government medical college. as per our government norms we have PRAN account which is very helpful to us at the time of retirement. But I have a pension policy of Bharti AXA life insurance (The dream life pension plan) with issued date 24/11/2008, last vesting date is 24/11/2018 and last premium payment date is 24/11/2017 but the maturity date is 24/11/2038. the premium amount is rs 12000 per annum. Already I have deposited premium for 4 years. whether I should continue or leave it. Please suggest me.

    • Hemant Beniwal February 2, 2012, 8:43 AM

      Hi Dr JP,
      Thanks for appreciating our efforts. It’s good that you are having NPS but don’t assume that it will be sufficient to take care of your retirement goals. But that doesn’t mean I am saying to continue this polices. Pension plans from insurance companies are very complex & very expensive. My suggestion is you can invest in this policy for 1 more year & can take a decision after new direct tax code.

  • DR JP SWAIN February 3, 2012, 12:50 AM

    Sir,
    Many many thanks for your answer of my last question. As per my salary I am a tax payer at 30% slab. Already I have investment 1 lakh rupees as per 80C. Now I want to buy infrastructure bond and mediclaim insurance plan for me and my parents to save tax beyond 80C. Please guide me for the best one as early as possible to buy in this month of February 2012.

    Thank you.

  • Dhrubajyoti Ganguly February 23, 2012, 10:42 PM

    Alchemist Fixed Deposit offering 12% interest as Monthly Income.Is it safe or fake?

  • Vipul Gaur March 7, 2012, 3:54 PM

    I am a Salaried IT-Professional. I want to purchase a Flat in the name of my wife. She is a housewife & so not earning.
    – will any Bank provide finance in this case?
    – can I submit HRA claim to my Employer for the property bought in the name of my wife?

    • Hemant Beniwal March 16, 2012, 7:08 AM

      Hi Vipul,
      Even if you are able to do all this what you have mentioned – this will not come under legitimate tax saving. I will suggest you to avoid this as there is high probability that IT dept will question you for this.

  • Himanshu March 26, 2012, 3:05 PM

    I have invested 150000 in 3 yrly premium of 50000 each in Bajaj Alliance Century plus- Asset allocation since 2008 till 2010 & have not paid any further premium, my current Fund value is 151561/- (as on 23/3/12), should I continue the fund or should surrender it as fund surrender charges are 5000 & yrly carges for fund are 10000.

    • Hemant Beniwal May 30, 2012, 7:15 AM

      Hi Himanshu,
      If you will surrender a ULIP without completion of 5 years – this will be taxed. (I am assuming you have used this ULIP for section 80C benefits)

  • Javid May 3, 2012, 3:07 PM

    Hello,
    Currently my parents are living in a comfortable enough rented house that costs INR 16,000/month in chennai. Is it a good idea to purchase a house/flat in chennai that could cost me around INR 60,00,000 and inturn save the rent? How would one figure out that his investment is profitable. I have no idea whether its a good investment or not. Need your expert advice.
    Regards,
    JJ

    • Hemant Beniwal May 30, 2012, 7:16 AM

      Hi Javid,
      Buying house is a big financial decision – don’t depend on forum answers for this.

  • Anita May 30, 2012, 4:58 PM

    I want your opinion for the ICICI Prudential Pinnacle plan? I have already purchased one.
    It is for 5 years. The premium amount is 50000.
    If you advise, I shall cancel it,as the grace or free lookup period is still on.

    • Hemant Beniwal May 30, 2012, 8:41 PM

      Hi Anita,
      Immediate Cancel it – you will be shocked to know that IRDA has proposed banning highest NAV guarantee products.

  • manas May 31, 2012, 8:54 PM

    sir
    I have a max ulip plan and this is 5 yr running. initially, I had choose growth super fund,

    fund switching option is there but, i dont know among Secure, Conservative, Balance, Groth fund and Groth super fund ,when and which fund i have to choose. please guide

  • meera menon June 4, 2012, 6:03 PM

    Hi Hemant,
    Can you please comment on HDFC YOUNG STAR plan.Can it be advised for my client a business man, with kids of 8 and 3 years.Seems to be interesting .
    Thanks for all your valuable postings…
    regards,
    Meera

  • ashok June 4, 2012, 6:56 PM

    sir, iam new to this sector and coulld u explain what is the difference of mutual fund, equity fund, debt fund. i would like to get a good returns. i have not invested any amount. pls sugesst how much to invest for good returns.

    • Hemant Beniwal June 10, 2012, 7:13 PM

      Hi Ashok,
      My suggestion is first you should invest some time in learning finance.

  • Nishi June 11, 2012, 1:38 PM

    Quite useful page , Learned from each question asked by visitors of this site.
    Still I would like to read more about ETF as I really dont understand what ETF is.
    As I mentioned in one of my query (on some other page) that I buy 2 gm gold coin monthly with an intention that it is going to prove a good investment by the time my son (8 months) will grow up. But buying gold also gets a worry with it, that is to keep it secure for this long tenure.
    So want to understand if Gold ETF is similar to buying gold coin ? I may sound weird but guide me about ETF so as to understand the difference, if any.

    Regards,
    Nishi

  • Ramesh June 17, 2012, 9:10 AM

    It is a pleasure to read and reread your views on various matters. You always give us a concise and well researched info on various investment topics. In Mutual Funds you give us top MFs in each category and your advice is very useful.
    One area missing is longterm investment in Stocks. I think there must be some stocks, say top; 10, where one could safely invest for long term, just like MFs. Of course we would need to track them for their performance. Now as the market is down, these stocks must also be available at comparatively cheaper rates. Could you write something on this topic?

    • Hemant Beniwal June 17, 2012, 4:50 PM

      Hi Ramesh,
      Thanks for appreciating our effort.
      One should know his limitation & we think we are not that smart to research stock so we depend on professional for that :)

  • Ritika July 24, 2012, 6:31 PM

    Sir, my mnowledge in tax or finance domain is limited therefore seek for your advice. I am an indian salaried person and I borrowed around 7 lacs from my sister through her nri account in hdfc for Purchasing a property. She is working in oman and is not liable to pay any tax there. Now i want to repay her money back and and want to transfer to her nri account and she further wants to invest it in a fixed deposit.
    I wanted to understand if she will be liable to pay tax on the principal as well as the interst computed ie. if TDS will be deducted by the bank for her and if there is a way to save the maximum ? Is there a better way to invest ?
    Looking forward to your advice

  • ashwin August 28, 2012, 3:05 PM

    Hi,
    1st of all thanks for posting useful views regarding finance. My salary is 30K and at present i have policy of jeevan saral with SA 2.0 L and jeevan anand with SA 2.5 L also one reliance gold mutual fund.I have one daughter of one years old and need to plan for her education and marriage with my future retirement

    Sir pl advice where to invest as i m totally confused

  • Sanjai September 2, 2012, 8:09 PM

    I had purchased following IPOs

    NHPC 380 shares @ Rs.30 each. Now the rate is Rs.17.75
    BEML 14 shares @ Rs.1,175 each. Now the rate is Rs.277.50

    These were purchased in 2006 & 2007. Please advise what I should do with them.

    • Vikas December 21, 2012, 11:29 PM

      HI Sanjai,

      TFL guide do not advice direct equities.

  • Sanjai September 2, 2012, 8:10 PM

    Sorry its IFO not IPO

  • a chaudhary September 9, 2012, 12:00 AM

    sir,
    i want to invest on time rs.200000.00 t0 rs.400000.oo for getting regular monthly income. tell me what plan to choose and company/bank name not lic.
    thanks

  • Nancy September 24, 2012, 1:23 PM

    Hi, I have an Life insurance plan holding for companies such as LIC, SBI and Kotak (ULIP) but doesnt have an Health insurance . my question are
    1. Which health insurance company i should go for and their plans ? (I am an unmarried person and 33 years of age).
    2. Can i break the SBI Life insurance and take a new health insurance plan ? (SBI plan i have taken in 2006) .
    3. If i break the SBI Life insurance taken in 2006 would i make any financial loss?
    4. I need to take health cover for my father and mother . Father’s age is 78 yrs and mother is 68 ? can i get 1 single health cover for me and my parents?

  • Rohit September 25, 2012, 6:35 PM

    My understanding is that if I park some lum sum amount in the SBI Maxgain account the tenure will come down as principal amount would be reduced. So indirectly I am earning 10% on my funds parked in the current/savings account. So do I need to add this notional income while filing returns ! If not its a wonderful avenue from a debt investment point of view where you have both liquidity + interest rate (home loan interest rate )which would be always greater than the FD rates !!!

  • kamini November 2, 2012, 2:38 PM

    Hi,

    My Husband is 31 yrs old.

    My target corpus for retirement in 30 yrs – 2 crores (2042), Child education in 14 yrs – 25 lacs (2027), Child marriage in 18 yrs – 25 lacs (2031)

    Does my target corpus for all segment match with the rocketing inflation in respective future years ?? Are these targets achievable?

    How much should we invest in MF, FD and gold respectively to achieve these targets??

    We can set aside Rs.20K per month and that will grow up gradually.

    Also,

    From Oct 2010, we have BIRLA SUN LIFE INSURANCE – CLASSIC ENDOWMENT POLICY (Magnifier- 30 yrs plan) for me and my husband.

    We pay Rs.5600 p.m as premium for both of us. Policy document reads that this fund invests more in equity.

    Sum Assured is 39 lacs for my husband and 9 lacs for me….. But surrender benefit end of 30 yrs worked @6% 18 lacs for him & 14 lacs for me seems very disappointing.

    We dont ve any other insurance policy other than this.. Are we adequately insured?? Will this help for our retirement?

    Do u recommend to continue this policy Or drop this and take a term plan? But term plan will not even fetch this surrender benefit also, then how come is it beneficial??

    Plz help…..

  • shamsher November 9, 2012, 4:41 PM

    Sir
    I want to invest 2000/month in SIP plan for 15-20 years for the future so i want to know that what is the best plan and how.

  • Pinaki December 4, 2012, 12:15 PM

    Hi Folks,

    I want to thank you for this site. It has been an immense eye-opener and a wealth of knowledge.
    My question: I had been speaking with a Financial consultant who has put a business case for ULIP as compared to a SIP in MF. His argument is as follows:

    MF have an expense ratio of around 2-2.5% and if you are looking for a retirement fund with a tenure of 15 years, it is much better for go for a ULIP as the costs are much less compared to a MF(around 1.5% for ULIPS as per the new IRDA laws). He has even extrapolated the data for 15 years with fixed return of 15% in both the cases that the costs of ULIP would be less by 7-8 lakhs.

    Can you please let me know if his hypothesis is correct with numbers if possible?

    Thanks,

    Pinaki

    • Vikas December 21, 2012, 9:49 PM

      Hi Pinaki,

      The major issues with ULIPs is transparency and underperformance. Unlike Mutual funds where you can view the entire factsheet with load of information for analysis, you do not see any in ULIPs. On other hand if there is any under performance then you do not have option but to exit from policy.If its early, then you might have to incur heavy charges.

      The cost may even out in very long term but lower liquidity and other factors makes it score lower then mutual funds.

  • DEEPAK VERMA December 13, 2012, 11:39 AM

    Hi,
    I had invested in SBI LIFE – Smart ULIP where I was made to pay Rs 50,000.00 for three years. The lock in period was 10 years. I have completed 4 years till date. I checked up the present value, I was told that it is Rs 1,43000.00 as on today. I spoke to one person, he advised me to continue in the scheme and as all premiums have already paid, the admin charges would not be deducted any further, thus would get better returns henceforth. He predicted that the amount of Rs 7 lakhs is expected from this investment as the highest nav value in the first seven years would be paid.
    I am totally confused whether to continue in this scheme or to do premature withdrawal to minimize losses. kindly help.
    regards

    • Vikas December 21, 2012, 9:18 PM

      Dear Deepak,

      In any ULIP policy some charges like Fund Management are annual and deducted irrespective of your premium payment.If you stop paying premium, these charges will be deducted from your fund value.

      Any ULIP policy benefits only when you continue the premium payment for the term since the charges are on higher side initially and even out later. So if you wish to discontinue the premium payment, analyze all the charges and then make a decision.

  • param January 22, 2013, 12:33 AM

    Thanks hemantji for making me financially literate.

    Thanks

  • param January 23, 2013, 2:15 AM

    Hemant ji thanks for ur financial literacy course.
    I want to ask where we can find crisil balanced fund index historical data.
    Please do reply…
    Thanks

    • Vikas March 27, 2013, 10:46 PM

      Hi Param,

      You can get the information on this index on CRISIL website.

  • sankar February 25, 2013, 5:52 PM

    Is it advisable presently to buy stocks of reputed established Infrastructure cos. [e.g. IVRCL /HCC/GAMMON INDIA] since the price is rock bottom ?
    Also as Fossil fuel ,raw material of POWER Cos. ,is depleting everyday because of careless usage, can we buy shares of Solar Cell producing co. like WEBEL SOLAR etc. ?
    Please elaborate. Regards !
    SANKAR.

    • Vikas March 27, 2013, 10:48 PM

      Hi Sankar,

      We do not track direct equities.

  • Hariharan March 4, 2013, 8:08 AM

    I have recently purchased a house with my investment and a home loan of Rs 40 lacs with 15 years EMI @ 45,000/- . I had used my FD for the home, except one FD of 20 lacs maturing in April 2013.(I did not withdraw this since I will loose interest @ 9.25% p.a.). The EMI is making my monthly expense very tight with almost no savings. Should I make part payment of home loan from matured FD and reduce the EMI or continue the EMI and re-invest the FD. My children college education is another 6 years.. the FD can only help me in any urgent fund requirement, else I have about 5 lacs in wife’s account. However I feel I am loosing by keeping the FD and paying full EMI. I am planning to rent my flat but have not found a tenant till date. Please advise the best way forward on my FD and EMI.

    • Vikas March 27, 2013, 11:03 PM

      Hi Hariharan,

      If Loan EMIs strain your finances, then it is not a wise decision to continue with them considering the uncertainties which can arise. In your case also, adding such a high EMI was not a right decision.You should on priority look at reducing this burden with your FD bringing it to manageable limits. Then you can plan to invest for your child future with the savings you will make. Hopefully as you get a tenant, your EMI worries will reduce as it will get adjusted partially or fully with the rent.

      For balance in your FD you should also look at allocation in the right asset classes which are tax efficient delivering you better returns.
      Read this to know more about investing
      http://www.tflguide.com/2010/06/long-term-and-short-term-investments.html
      http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

  • Urvish Shah March 7, 2013, 1:41 PM

    Right now, I am investing approx. 10,000/month in LIC and 6,000/month in Mutual Fund. Age: 34 years.
    I have my own house and now only some amounts are pending to close the home loan. Right now, i am not taking 100% benefit of home loan interest because of interest amount is less than 75,000/year now. What should be my next target for investment? Shall I take another Home to get benefit or some other real estate investment or something also? What you suggest?

    • Vikas March 27, 2013, 11:43 PM

      Hi Urvish,

      You are already investing in Mutual fund so you will be well aware of its benefits. Real Estate being an illiquid asset class is not advisable if you do not have resources. Home loan may give you tax benefits but will strain your finances if it impact your cash flows. Stick to mutual funds investments.
      You can read this to know about creating an investment portolio
      http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

  • Sunny shah March 12, 2013, 12:23 AM

    Hello Sir,
    I am 22 year old engineer, i am earning 30000 month and saving almost 15 to 16 thousand a month i think IT’s better to invest at early age so i started investing mostly in fd which givine me 8 to 10 % return . I already have a health and life insuarance,can u please advise me some idea for invesment which will give me 10 to 15% return with less risk?

  • rajesh rout March 18, 2013, 3:12 PM

    I am 44 years old, married without issues.Family income is Rs. 20,000/- without EPF,PPF or Pension coverage.
    Savings are 1. Two Rs.1 lakh LIC policies (maturing in 2015 & 2016), 2. One Rs. 1/2 lakh Tax Saving FD 3. One Rs. 1/2 lakh FD (2&3 maturing in 2016) 4. ULIP (surrender value Rs.1.35 lakhs, premium payment stopped) 5. ULIP (maturing May 2013, value Rs.1.35 lakhs).
    Plot of land, purchased in 2011 for Rs. 8.20 laks. Parental property is old and would need repairs soon.
    Income could rise after 3 months. Wife is not financially dependent.
    Please advice best mode of savings for future, putting aside Rs. 10,000 every month. Also if Health and Accident Insurance is advisable.

    • Vikas March 29, 2013, 10:17 PM

      Hi Rajesh,

      Health Insurance is very vital while planning for the future and Accident insurance helps to cover disability risk.So make these priority before making any investment-
      With regard to investing its necessary to quantify your goals first which will give you savings required to reach them.Once you have identified this you will be able to select the right investments matching your requirement.

  • Revol July 28, 2013, 11:55 AM

    Hello Hemant

    Currently i have SIP for 6,000 (L&T Tax Advantage Fund Direct Plan – Growth)

    Planning to split in to 3 or 4 funds, wanted to continue with L&T Tax Adv but wanted to reduce to 2,000 and increase my SIP value from 6,000 to 10,000/month. So i will have 8,000 to invest in other funds. Needed your advise on choice for other funds and your suggestion on this splitting.

    L&T Tax Adv — 2,000
    Franklin India Bluechip – 3,000
    Fund 3 – 2,500 – ?
    Fund 4 – 2,500 – ?

    Thanks in advance
    Revol

  • Hanumantha G K August 3, 2013, 10:14 AM

    Dear Hemanth,
    I am 25 year old unmarried guy.I am the lone earner in my family.I am getting 5.5 lacs per annum.
    I have put 42000 per year in LIC pilicies.I want to put rest 60k amount in order to meet 1 lac tax benefit quota. I can invest even additional 1 lac in some schemes.So I was thinking over few options like NSC, ELSS or FD. I am not familiar with all these.Can you suggest me best investment plan.

  • koushik August 13, 2013, 7:11 AM

    Hi Hemant,
    I am 31 yrs old married. I would like to have a corpus 1crore by next 15yrs and another 1crore by next 25yrs ,kindly let
    me know I am on right track of investment or not, if not please suggest me what I need to do.
    (all figures below in “Rs.”)
    Earning 80,000 pm
    Expenses: 20000pm
    SB a/c 100000
    FD a/c 100000
    EMI-home loan: 25000pm
    LIC jeeven anand: 6819 per quarter
    LIC jeevan saral: 1600pm
    LIC tarang: 8400pm
    ULIP Aegon Religare-iMax: 2000pm
    Reliance My Gold plan: 1000pm
    Term Insurance: 13300per year (1crore ,cover till 70yrs from Aegon Religare-iTerm)
    Invest in MF-SIP as follows:
    Franklin India Blue Chip-G: 1000pm
    DSPBR Top 100 Equity-G: 1500pm
    HDFC Top 200: 1500pm
    Tata Ethical Fund-G: 1000pm
    IDFC Premier Equity Fund-G: 2000pm
    Birla SL’95-G: 2000pm
    HDFC short term opportunities-G: 1000pm
    SBI magnum income: 10000 (one time)

    Thank you,
    With regards/Koushik

  • A.Prakash August 30, 2013, 11:59 AM

    Hi Hemanth,
    In Jan 2008 i started investing in TATA AIG InvestAssureII with a Annual Premium of 25000 for 30 years. Is it fine if I continue or shall i close it and divert my Investments into any other? If so, suggest me the best one?

  • Anil November 20, 2013, 10:10 PM

    I am planning to invest in a real estate company as a partner. I am working as full time PM in one of indian MNC & is in highest tax bracket. while I am investing am not planning to leave my job as of now.
    In what capacity or How should I go about investing in real estate company so as have minimum Income tax implications and it should also address questions which might get posted to me by say IT dept. about from where did I get my wealth, as am expecting to get substantial wealth after say couple of yrs. Do not discourage me as i had already taken decision & will be going ahead with investment.

  • Vinayak July 8, 2014, 12:30 PM

    is it safe to do an investment in Tirumalla Tirupati Multistate Co. Op. Credit Society Limited. ..wwwtirupaticredit.com?

  • atul August 17, 2014, 7:12 AM

    what could be the worst returns in investment through SIP in mutual fund in 10-15 years or more. I’m concerned as I’m investing more than Rs12000 monthly in SIP for the future of my kids.

  • Vivek August 19, 2014, 8:48 PM

    Dear Mr. Hemant,
    I’m 26 years of age. I work in the tech space.I quit my job after 4 years and 9 months. I am not going to a new job but am taking a sabbatical. I guess it’s more of a short break. After this break of 2-3 months, I will be looking for jobs in the startup space. So the possibility of transferring my PF to the new employer are low (given that startups in India rarely have a PPF account/system).

    Due to this, I’m not sure of the decision to take on my PF balance. The way i see it, i have two options: 1. Transfer current PF amount to PPF (The public PF scheme backed by Govt. of India) OR 2.Withdraw the money and find a new form of investment.

    From initial analysis, it looks like the traditional/conservative advice is to invest it in the PPF since it serves a dual purpose: Your money grows safely while you can apply for interest free loans on it too. However, i stumbled upon an internet article that says this (borrowing) is allowed only after 6 years of investing in the PPF.

    I would appreciate the financial experts’ advice. Specifically: 1. What are the pros and cons of either option? 2. Is there any other 3rd solution for this situation?

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