Investment Planning and Financial Advisory

Hi All,

Lot of people ask me how to save tax, what is the best investment planning strategy. So I have compiled a list of FAQ's on this. The questions were asnwered by Anuj Shokeen, leading financial advisor. He can be contacted at

anujshokeen@in.com

So let us start

carl asked, Hi, my wife and I take home 1.10lakh every month. We need to buy a house in Bombay costing 60 lakh, make other long term investments and also save some liquid cash. Please tell me how we should go about this. Also, is this advisable considering my wife might have to stay home once we have a child (2 years down the line). We currently have about 4 lakh in savings, and 3 lakh as investments.
Answers, i would advise you to consult a financial planner.

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malcom_bh asked, Hi Trideep, I am investing Rs 2000 each in Tata Infra, HDFC Top 200, ICICI Discovery and Reliance Growth. My horizon is 15 years. Can you please advise me on this about possible change in the strategy
Answers, Continue with HDFC Top 200 and Reliance Growth, while switch your investments from ICICI Discovery to ICICI Dynamic, while stop Tata Infra and instead invest in DSP Top 100.

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RahulG asked, I would like to save 50 lakhs towards my daughter's education. She is 6 months old. I have taken a termn plan from LIC for 50 lakhs for 30 years paying premium of 15000, and started SIP in HDFC top 200 of 4000 PM. Can i achieve my goal in 20 years of time? PLease provide your valuable insights/recommendation?
Answers, IF you are saying that you would require 50 lacs 20 years from now, then you you need to enhance your SIP to rs 7,000 a month. However if you want to educate your daughter with an equivalent of 50 lacs as of today then she would require a sum of 3.3 crores (current cost 50 lacs projected 20 yrs at a rate of 10% inflation) and your SIPs would give 33 lacs. I woud advise you to either reduce your goal amount or enhaance your investments with suitable advise

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RahulG asked, I would like to save 50 lakhs towards my daughter's education. She is 6 months old. I have taken a termn plan from LIC for 50 lakhs for 30 years paying premium of 15000, and started SIP in HDFC top 200 of 4000 PM. Can i achieve my goal in 20 years of time? PLease provide your valuable insights/recommendation?
Answers, IF you are saying that you would require 50 lacs 20 years from now, then you you need to enhance your SIP to rs 7,000 a month. However if you want to educate your daughter with an equivalent of 50 lacs as of today then she would require a sum of 3.3 crores (current cost 50 lacs projected 20 yrs at a rate of 10% inflation) and your SIPs would give 33 lacs. I woud advise you to either reduce your goal amount or enhaance your investments with suitable advise

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RahulG asked, I would like to save 50 lakhs towards my daughter's education. She is 6 months old. I have taken a termn plan from LIC for 50 lakhs for 30 years paying premium of 15000, and started SIP in HDFC top 200 of 4000 PM. Can i achieve my goal in 20 years of time? PLease provide your valuable insights/recommendation?
Answers, IF you are saying that you would require 50 lacs 20 years from now, then you you need to enhance your SIP to rs 7,000 a month. However if you want to educate your daughter with an equivalent of 50 lacs as of today then she would require a sum of 3.3 crores (current cost 50 lacs projected 20 yrs at a rate of 10% inflation) and your SIPs would give 33 lacs. I woud advise you to either reduce your goal amount or enhaance your investments with suitable advise

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RahulG asked, I would like to save 50 lakhs towards my daughter's education. She is 6 months old. I have taken a termn plan from LIC for 50 lakhs for 30 years paying premium of 15000, and started SIP in HDFC top 200 of 4000 PM. Can i achieve my goal in 20 years of time? PLease provide your valuable insights/recommendation?
Answers, IF you are saying that you would require 50 lacs 20 years from now, then you you need to enhance your SIP to rs 7,000 a month. However if you want to educate your daughter with an equivalent of 50 lacs as of today then she would require a sum of 3.3 crores (current cost 50 lacs projected 20 yrs at a rate of 10% inflation) and your SIPs would give 33 lacs. I woud advise you to either reduce your goal amount or enhaance your investments with suitable advise

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bharat asked, dear sir, please suggest two good & cosistence performers of diversified equity fund ,balance fund.income fund for medium term investment plan. should i redeem or stay invested in jm core-11,sundaran bnp paribas select focus equity, dws investmnet opportunity fund.
Answers, HDFC Top 200 and DSP Top 100 for diversified equity, HDFC Prudence for Balanced. move out of JM Core 11. while you can hold on your other investments.

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mahesh asked, for gross income Rs.40000 pm with age of 30 years & just married what you suggest as investment catagories
Answers, Congratulation on the new chapter in life. At your age and circumstances I would advise you to first prioritize and quantify your goals with the advise of a financial planner. This is the most important step to investing. As a thumb rule you can invest approx 65-70% in equity (via MFs) 15-20% in gold (ETF) and the rest in debt instruments.

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Sonali asked, Hi Trideep, I am Investing 2000 in DSP blackrock top 100, 2000 in HDFC top 200 growth, 2500 in reliance rsf. My target years of investing is 20-25 years. what rate of return i should expect ? Advise if any change is needed.
Answers, All your scheme selection is good, continue with your investments as all the schemes are top performers. The traget return in equity should be around 12% p.a., all above that should be considered as a bonus.

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Sonali asked, Hi Trideep, I am Investing 2000 in DSP blackrock top 100, 2000 in HDFC top 200 growth, 2500 in reliance rsf. My target years of investing is 20-25 years. what rate of return i should expect ? Advise if any change is needed.
Answers, All your scheme selection is good, continue with your investments as all the schemes are top performers. The traget return in equity should be around 12% p.a., all above that should be considered as a bonus.

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sanjai asked, Iwant to invest Rs.30000/- in HDFC Tax Saver Fund for Tax purpose. Is it correct decision? Otherwise what is the best option for me. I am a Banker (35 Yrs)having one 6 yr old daughter.
Answers, HDFC Tax saver is a good scheme, you can also look for fidelity tax advantage.

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Sonali asked, Hi Trideep, I am Investing 2000 in DSP blackrock top 100, 2000 in HDFC top 200 growth, 2500 in reliance rsf. My target years of investing is 20-25 years. what rate of return i should expect ? Advise if any change is needed.
Answers, All your scheme selection is good, continue with your investments as all the schemes are top performers. The traget return in equity should be around 12% p.a., all above that should be considered as a bonus.

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Asokan asked, I am 50 years old. How much is the risk if I dab in share trading? Or How should I be invested?
Answers, Equity share trading is a high risk game. Risk is a function of your appetite and tolerance, appetite can be irrespective of age, however tolerance is a factor of ability tpo replace lost capital, as you age your ability to replace lost capital goes down. Hence I would advise you to stay invested in equity portfolio (max 50% of your portfolio) and the remailder in debt.

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Kireeti asked, How much it costs to get the financial planning done from a 3rd party? Kindly suggest some 3rd party Financial planners from Bangalore?
Answers, various financial planners charge fes ranging from 2000-80000. However what you should do is to see how comprehensive is their plan and also the strength of their recomendation.

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SHYAM asked, wHAT WILL BE THE IMPLICATION OF DIRECT TAX CODE ON LONG TERM CAPITAL GAINS WHEN THE SAID CODE COMES INTO FORCE
Answers, At the draft stage the direct tax code aims to consider capital gains as normal income and hence the normal tax rates would be applicable. THus there is a possibility that the indexation benefits of capital gains could be taken away if this code is implemented as it is.

BVENKATM asked, AMONTH SUNDARMA S.M.I.L.E, UTI DIVIDEND YIELD, UTI DIVIDEN YIELD, RELIANCE REUGLAR SAVINGS EQUITY, HDFC TOP-200, BIRLA SUN LIFE MIDCAP PLAN-. OUT OF THESE SIX, SUGGEST ME 2 LARGE CAP AND 1 MIDCAP FUND FOR MY SIP PORTFOLIO. Answers, out of these only HDFC Top 200 is a pure large cap fund. however for SIP, you can go for HDFC Top 200 and DSP Top 200, for Mid caps you can add to Birla SL Midcap. RAMANA asked, DEAR SIR,is there any MF which covers under 80c and give us good returns. Answers, HDFC Tax Saver and Fidelity Tax Advantage would be my pick nmah100 asked, my MF investments over the past 5 years have remained almost flat, except for some dividends. Would you recommend that I liquidate and start all over or hold to my portfolio (65% equity and 35% Bonds/deposits). I am 37 yrs of age and have time on my side. Answers, You can hold onto your investments, while you can move out of your bad schemes and move into good schemes. however MF's on an average have grown @ 16% to 20% over the past 5 years. adad asked, I ve invested in L&t infrastructure (20000), Fortis future leaders (20000). Returns are negative till date. Shouls i hold or switch to another funds? Answers, Move out of both the funds as they are too risky. better switch to HDFC Top 200 and DSP Top 100.

Aftab asked, Hi Sailesh, unknowingly i have invested in a ULIP plan of Bajaj Allianz New Unit Gain, the premium is Rs.12,500/- yearly, the policy was started in April 2009, please advice.. shall i continue and pay the next premium or cancel the policy? Answers, hi, continue with the premium payment. Dont surrender the policy. Over the next 7-8 years you should be able to make good returns. aish_786abhi asked, Which mutul nd is best for investment only for 3 years Answers, hi,for 3 years the best option would be a balanced fund. These funds invest 65% and more in equities and balance in debt. HDFC Prudence and DSP BR Balanced Funds are my best picks. SUPPANDI asked, Sir, can you please suggest some good short term debt mf's Answers, hi, if your invesment horizon is less than a year, then you can consider funds like HDFC Short Term Income Fund and Templeton India Short Term Income Plan. klas asked, Please suggest plans to invest Rs 20L for me due for retirement after two months so as to lead moneywise a happy retired life. Answers, hi, first ensure that the money that you will need to meet your day to day expenses are kept aside in a bank FD. The rest can be invested in equity funds to ensure that there is no erosion of capital. Inflation will eat into your capital over a period of time and hence it is always better to have atleast 10%-15% of your corpus in equity funds to growth the same. mahesh248 asked, I have investment in TATA-AIG invest assure-II (amount Rs.18000/annum) and LIC's market plus (Rs.10000) (growth) ulips. now completed 3 years in both the plans. Can i continue with the same plan or can i switch to other plan.. Answers, hi,continue with your plan. Complete the 3 year mandatory period then see if you are making any money exit from the same anil.gupta123 asked, sir , i have 50 thousand ruppes .i want to make it grow but without risk . i have invested in stocks but ia ma in deep loss .so i fear to invest any more . kindly suggest what to , i want the money to invest it for 1 year for a gain of 12 -15% Answers, hi, if you want to make your money work harder for you then you will have to take risk. Equity funds are the answer to your question. I would first of all advice you to increase your investment horizon from 1 year to atleast 5 years. This will ensure that you minimise the chances of losing money in equity. Also, take help of a professional investment advisor to help you select the good funds that will help you make the returns in the range of 12%-15%. I have given the names of few funds earlier in my chat. Salil asked, I am investing Rs. 2500 each in ICICI Prudential Infrastructure Fund and Reliance Regular Savings Fund for the last 2 years and i am planning to continue with these two funds for another 7-8 years. What you suggest? Also should i book profits from time to time or should allow the money to grow. Also want to start one new SIP for around Rs. 3000 pm. for long term. Please advice Answers, hi, continue with your investments, try and add 2-3 more schemes in your portfolio. Yes,keep booking profits at regualr intervals to balance your asset allocation. raghuram asked, hi sir. I am getting 4L annual as salery how to make my earnings divided for investment with target of house purchase, childern education,marriage, after retirement security, what type of investment methods & funds you suggest Answers, hi, the answer to your question lies in doing a comprehensive financial planning for yourself. The plan will tell you how much you need to save on a regualr basis to meet all the goals you have mentioned. It will also suggest ways and means to reach your goal in case your savings are not adequate. Take help of a profesional planner to help you with the same. hasnainali asked, Heloo , To gain Rs 1 cr in next 20 years , what should be my monthly investment in MF? Answers, hi, assuming your investment earn you an average return of 12% p.a.you need to invest a sum of Rs 10,000 (approx) to become a crorepati in next 20 years. Ashu asked, Hi Sailesh. Could you please suggest some good pension plans? What is your opinion about NPS(National Pension Scheme)? Also I want to invest 5-Lacs now. Please suggest how to go about the same in Shares/MF/Pension plans. Thanks Answers, hi, NPS has not become popular with investors. As an alternative, you should get retirement planning doen for yourself that will tell you exactly the corpus you need to accumaulate by the time you retire to ensure that it generates adequate income year after year to meet your post retirement expenes. Pension plans offred by insurance companies are not the ideal solution. sbkulkarni asked, i am 43 yrs old. i have invested in sip (rs.1000 each) in hdfc top-200, reliacnce reg saving fund, birla sunlife front line equity, idfc pre equity, sundaram financial opportunities, select focus, kotak 30. and 1 lakh in uti ulip. i need not have to plan for income tax as i hv savings of more than 1 lakh per annum in PF, please review and comment. i would like to go for 250000 term insurancewhat is yr opinion. Answers, hi, so many funds! All are good. Stay invested. Dont like the idea of having Rs 1 lakh in UTI ULIP. While I appreciate your decision of taking a term plan, the sum assured of Rs 2.50 lakhs is on the lower side. I am assuming here that you do not have any other insurance policy in your name. It would be a good idea to add one more zero after Rs 250000. montecito asked, Hi sailesh, I have two questions for you : 1. Is Mutual Fund better or Ulip ? 2. I want to invest 10000 rupees a month which funds should i pick ? Answers, hi, if investment is your objective then mutual fund is my answer. Divide the amount equally between well managed and diversified equity fund. Stay away from ULIPs. chemistanand asked, Hi Shailesh, I am earning 100K per month and would like to invest around 50K monthly. Can you advice me apart from MF &Shares what is the better bet with income tax exemptions? Answers, hi, consider investing your savings of Rs 50k into mix of equity and gold funds. You can buy gold worth Rs 10k every month through gold ETF. the remaing Rs 40k can be invested in well managed diversified equity funds like HDFC Top 200, DSP BR Top 100, Franklin India Bluechip and Sundaram Select Midcap. For tax saving you can consider fund like Fidelity Tax Advantage Fund among others. shuklaji asked, which is the best and safest investment option..FD or shares? Answers, hi, the safest investment is defineitely bank FD when compared to equities. However, one needs to have both the investment in portfolio. By playing 100% safe you may not be able to build wealth for yourself. Some amount of risk is necessary to make your money work harder for you. mahesh asked, dear Mr.Sailesh Gud Afternoon, I am 40 years old and i have 2 lacs rupees, is it better option to repay my home loan or plz suggest me where to invest Answers, hi, I am always in favour of repaying the loan over any other alternative invesment. Its always good to have a healthy balance sheet with minimum or zero debt. Whatever you save on EMI, should be channelised into equity funds to buld wealth over the long term. gunz asked, Hi Sailesh...I have received around 30000 rupees as bonus..Can you advice me on how to invest this amount to get good returns in the near future? Is open eneded MF's a good option?If yes which MF would you suggest? Answers, hi, if your invesment horizon is 5 years and more and you are willing to take high risk then invest your money in diversified equity funds. Funds like HDFC Top 200, DSP BR Top 1000 Equity fund are among the better managed funds. LML asked, HI I AM SELF EMPLOYED- I HAVE INVESTED 20000 EACH IN HDFC TOP 200 , RELIANCE REGULAR SAVING AND DSP BLACK ROCK I WANT TO INVEST FURTHER - AROUND 60000 LET ME KNOW IF I SHOULD CONTINUE WITH THE SAME FUNDS OR LOOK FOR OTHER FUNDS Answers, hi, consider funds like Franklin India Bluechip and Sundaram Select midcap. I am assuing that your investment horizon is atleast 4-5 years. anilanil asked, i wants to invest some surplous for short term in instrument which can be liquidated easily within 3-4 days. expected return is 10-12% p.a. pls suggest some such instrument. Answers, hi, the best investment for you is liquid funds. the returns of 10-12% are impossible from liquid funds. Hence, my advice to you would be to reduce your return expectation to somewhere between 4%-5% p.a. Karan asked, I want to invest 5000 each month. What is the safe bet which can help me build a nice corpus in next 10yr or so. Secondly, what is the best way to invest when i m looking for both safety n good money growth? Answers, hi, if you are looking at 10 years horizon and wish to grow your money then the best option would be equity funds. But these are high risk investment. The best strategy would be to divide the money into 2 halves - invest 50% in safe product like Bank FD. Invest the balance half in high risk, high return generating product like equity funds. This will take care of growth with safety. bhaskarwar asked, Hi Sailesh, I am investing Rs 2000 each through SIP in TATA Infrastructure, HDFC Top 200, Reliance Growth and ICICI Discovery Fund. Can you suggest changes if any? Answers, hi, I would prefer a large cap diversified equity fund like DSP BR Top 100 Equity over TATA Infrastructure Fund. Rest all are good. VarunSingla asked, Is it better to invest in Gold ETFS ? Answers, According to me investment in gold should be done through Gold Exchange Traded Fund (ETF). Every unit of Gold ETF is backed by half or one gram of physical gold. The units of Gold ETF are held in demat form. Hence, there is no botheration about safekeeping of gold that is associated with physical form. Also, the gold held by Gold EFTs are backed by physical gold of 0.995 fineness which is secured and insured. Gold ETF score on the wealth tax front too; they are not considered as wealth for Wealth Tax purpose. Physical gold is considered as wealth for wealth tax purpose. Also, Gold ETFs are treated as long term capital assets if held for more than 12 months from the date of purchase. One can avail of the indexation benefits claim concession from long term capital gains tax, if any. Don’t rush into buy gold. Invest a small a sum every month. Spread your investments over the next 6-12 months. sds asked, My age is 31. My monthy salary is 38k of which i have i have home lone premium of 15k.I have one endowment and one money bag LIC policy. I also invest 5000k yearly in market plus. I have also one money bag policywhich has yearly premium of 12000 yearly.I have ULIP policy of HDFC (HDFC Youngter plan II)having monthly premium 2000 resp. CCan you please advise me on the investment that i have made and how i can balance my portofolio. Answers, Hi, you seem to be investment savvy or rather insurance savvy. You have lot of insurance policies in your portfolio which is fine. Insurance should be there in your portfolio to protect you from the risk of dying too early. The investments like shares, mutual funds will help you meet your life goals. My advice to all the investors through this chat is that first they should get an investment plan made for themselves and then move onto the selection of products that will help them achieve their goals. Peter asked, I am Anil, and my monthly take home is 19k. Please advice any investment plan which is sutable for me. Thanks Answers, Hi, there is nothing like a best financial plan. Every financial plan is different and suited to the need of a particular individual. Having said that I would like you to be crystal clear of your life goal like retirement, buying a house, children education and their marriage, etc. Since its a specialised task I would advise that you take help of an expert financial planner to help you with your financial planning. I can assure you that once you have done the planning, the process of investing will be very simple and easy. Don’t jump straight to buying investment products like mutual l funds, insurance and bonds. Know what you need to reach your goals on time and then take action accordingly. NAYAN asked, ONLY IN INVESTING MF, FD, POST, BANK INTEREST, STOCKS, CAN MAKE SENSE. WAT ABOUT PROPERTY? Answers, hi, properrty is a good investment avenue. Historically, property and equities have given the highest returns. Property investment requires relatively large capital investment to begin with. Also, in India there is not regualator in the property market. So a lay investor is at the mercy of real estate agents. Also not research is avaialble on the property unlike equity. Hence, it is a relatively difficult job to buy property. Real Estate mutual funds when launched will be a good option to invest in prpoperty. Balu asked, Dear Shailesh, what is your views on ULIPS(after IRDAs reduction of charges)do you think they have gotten better. And also 7-years highest NAV stuff which some insurers are peddling now? Answers, hi, I am not in favour of ULIPs. I prefer to keep investments and insurance separate. The job of insurance companies is to provide insurance to protect the life of people. Investments are best handle by mutual funds and portfolio managers. I am not sure how 7 years highest NAV guaranteed products will be managed. Its better to wait and watch the performance of these products. As far as insurance is concerned go for the term plan. Stay away from ULIPs raj asked, i want to invest Rs 50000/- for my 3 yr old child, time to invest min 10 years . shall i invest one time or invest with SIP. as u suggested i am planning for hdfc top 200 & franklin. thx Answers, hi, its a god idea to start an SIP in HDFC Top 200 and Franklin India Bluechip fund for your 3 year child. Assuming you are going to spend the amount on his/her higher education, you have more than 10 years time horizon which is very good for equity investments. I am confident that if you follow the practice of SIP over the next 10 years you will be able to build a sizeable corpus for you child's education. Kireeti asked, Can we consider the normal influation while caluclating future education and marriage costs? Answers, hi, the cost of education and marriage is growing faster than the cost of day to day living. In my calculations I take the inflation as 10% for children education and marriage cost. skh asked, what is your opinion about ICICI dynamic fund? Answers, hi, its a good fund. IF you have any invesment in it continue with the same. hasnainali asked, Sir , I am investing 2000 each in HDFC top200 , SBI tax gain , 1000 in DSP BR top 100 via sip .Investing time horizon is 15 years. can you pls inicate me ultimate corpus after 15 yrs.total invetment will be 9 Laks. Answers, hi, assuming an average return of 12% p.a. over the 15 years, you the value of your investments will be approx Rs 15 lakhs sid asked, which one u suggest for a period of 5 years - ELSS or RD or FD or Gold Answers, hi, all three are good for 5 years time frame. I would adivse that allocation to gold be capped at 10%. The balance 90% can be equally divided between ELSS and RD. Ashok asked, My taxable income is under 20% tax slab. if i invest 3 Lakh in FD, the tax on the intrest earned when added to my income will fall in 30% slab. Is it wise to go for FD. I guess there is TDS for FD also. Answers, hi, please check if you have considered deduction of Rs 1 lakh under section 80C in your calculation. If yes and still you have to pay tax, then there is no other option but to pay the tax. TDS is tax deducted at source - that doesnt reduce your tax liability.