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Chat Transcript

Amit Trivedi

Author & Founder , Karmayog Knowledge

Equity investments simplified


Questions Answered


guest: I am a ameteur invester. Kindly suggest me some mutual funds, , keeping in mind my retirement. I would like to have few mid term and few long term Mutual funds. Also keeping IT in mind.

Amit Trivedi: While you are planning for your retirement, you have not mentioned your age. If your retirement is more than 10 years away, I would suggest you start a monthly SIP in a diversified large-cap equity fund. You may also do an SIP in an ELSS (Equity Linked Saving Scheme) if you need deduction under Section 80C. However, if your retirement is less than 10 years away, please consider a good part of your SIP to go into a debt fund and some into a diversified large-cap equity fund. If your retirement is less than 5 years away, keep around 20% of your SIP in equity fund and the rest in debt fund. Go for growth plan so the returns earned would accumulate without having to worry about taxation. The question of taxes would arise only when you decide to take the money out.

guest: Sir, i want to buy a house in next 5 years and i can invest rs.10000/month, kindly let me know the MF in SIP

Amit Trivedi: Congratulations for fixing your goal and the time horizon. The secomd element of the goal would be the approximate cost of the house you want to purchase and how much of it would be through loan. You start investing to accumulate either the full amount of the cost of the house (in case you are not taking a loan) or the down payment (if you are taking a loan). Decide that amount and then the planning starts. However, considering that you have only five years to go, you must keep a larger portion of your investments into debt funds - I mean roughly Rs. 7000 to Rs. 8000 should go into monthly SIP in a debt fund and Rs. 3,000 to Rs. 2,000 in an equity fund. Assume that your equity investments would fetch less than 10% p.a. and debt funds would generate around 7% p.a. This would help you understand whether your investments would be sufficient to meet the goal. The rates of return indicated are only for the purpose of calculation and not any indicator of what would accrue in the future

guest: hello sir, my age is 29. i want to invest 5000 rupees per month through sip. some amount i want to invest for 4 to 5 years . another amount i want to invest for 10 to 15 years. kindly design my portfolio. i am new to sip

Amit Trivedi: Consider SIP into a debt fund for the near term goal (4 to 5 years away) and SIP into an equity fund for the longer term goal. Stick to debt funds with high credit quality and low maturity; and diversified large-cap equity funds.

guest: I am 20 and make around 45K a month want to start SIP what should be the right plan? Can invest upto 10K/Month.

Amit Trivedi: The right plan is a function of three things: (1) your need to take risk, (2) your ability to take risk, and (3) your willingness to take risk. The need to take is a function of the rate of return required. The ability is decided by your financial situation - income, expenses, assets, liabilities, whether you have adequate insurance, what is your investment time horizon and certain other factors. Your willingness depends on your mental state of being able to handle the risks in the portfolio. Without knowing these things, nobody can answer your question.

guest: Hi, I would like to invest roughly rs4,00,000/- for mid to long term. Pls advise best possible return mutual fund or equity script

Amit Trivedi: I do not know which investment product would yield the best return in the future and I don`t even known someone who does. Please consider looking for investments that serve your unique needs rather than trying to find the highest returns possible. While we all know that an aeroplane can travel faster than an autorickshaw, but you can only take an auto if you have to go 5 km away.

guest: Please suggest me a Tax planning Mutual fund direct for the next three years. I am planning for 5k p.m

Amit Trivedi: There is a category of mutual funds known as ELSS that helps investors save tax under Section 80C of the IT Act. These funds have a mandatory lock-in of three years. However, since the schemes invest in equity shares of companies, such funds should be considered only for long term holding and not for a three year period. Please do not confuse the mandatory lock-in with the minimum holding period required for the asset class.
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