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Chat Transcript

Amit Trivedi

Author & Founder , Karmayog Knowledge

Equity investments simplified


Questions Answered


guest: What should one do now post 2018 budget on mutual funds. Should one take dividend route or growth route?

Amit Trivedi: There is no change on funds that were classified as non-equity oriented funds as per the income tax act. So, no need to make any change there. However, on the equity-oriented funds, growth option was always desirable since one would have gone to equity funds not for regular income, but for growth and wealth creation. Budget proposals have changed nothing as far as the fundamentals are concerned. Go for growth option and give your investments time to grow.

guest: I want to invest lumpsum amount of Rs. 10 Lakhs in Mutual Fund to get divident every month for my retirement life. Can you please advise which MF i can invest ?

Amit Trivedi: I understand you need regular income. It should not matter in which form it comes, so long as it is regular and tax-efficient. My suggestion would be to invest in liquid funds or ultra-short term debt funds and take regular monthly withdrawal from there - the tax incidence would be very low. keep money to fund roughly five years` worth of expenses in such a fund. The balance amount may be parked in a conservative balanced / equity fund that would help grow the money over a period of time.

guest: I want to know how much i have to invest in MF to get rs. 6 Lacs after 5 years

Amit Trivedi: There cannot be a standard answer to this question since you do not have a guarantee on investment returns. Also, there are a different variety of mutual funds, which deliver different performances. It all depends on how much risk you are comfortable with - both financially and psychologically and how long can you wait

guest: i have already invested in some mutual funds since last five or four years and now seeing that they are not doing well although in previous years they have given good returns. so the my question is how to change them in current well doing mutual funds and what will be the process to transfer the already accumulated amounts in previous mutual funds.

Amit Trivedi: The process to transfer money is simple. You can give a switch request if the new fund also is managed by the same fund house as the old one. Or you can redeem the money, take it in your bank account and invest in funds of your choice. That is as far as the process goes. However, the bigger question is: why do you want to make changes in t=he investment portfolio? If you keep shifting from fund to fund periodically based on market movements, you are not going to benefit, since your shifts would happen after an event has happened and not before. Please select some good mutual fund schemes and then stay invested in those through the ups and downs of the market.

guest: Dear Sir, I am 38 years old and my monthly pay is approx 85,000/- per month. My goals are :- To buy a house after 15 years whose present cost is Rs 75 lacs. To make a corpus of Rs 25 lacs in next 12 years for my son\`s education To buy a car after 5 years whose present cost is 13 lacs. Now my investments are as under :- Provident Fund - Rs 25,000/- per month SIPs in following mutual funds which I have started in August 2017 :- Tata Equity P/E Fund Regular (G) - 2,000/- pm Mirae Asset Emerging Bluechip Fund Direct (G) - 1,500/- pm Franklin India High Growth Companies Fund (G)- 1,000/- pm L&T India Value Fund (G) - 1,000/- pm DSP Blackrock Opportunities Fund Regular (G) - 1,000/- SBI Bluechip Fund - 1,500/- Please guide me if I am investing in right mutual funds and will I be able to achieve my goal on completion of stipulated periods as allotted by me. If I have to invest more, how much more should I invest ?

Amit Trivedi: First of all, I must congratulate you for starting on the right note by identifying your financial goals clearly. Secondly, it is great that you have taken baby steps in starting investments, too. A quick calculation tells me that the investments may not be sufficient to meet all your goals. If you are able to invest more, please do so. However, if it is not possible right now, resolve to first increase your monthly investments whenever your salary goes up. By increasing the investments periodically, you should be fine. To calculate the amount required for investment, please use the various online calculators.

guest: Hello, I\`m a 26yr old student currently invested in a diversified portfolio consisting of - DSP BR Small and MidCap fund, ICICI Top 100 fund, Reliance Small Cap Fund, Kotak Select Focus Fund, Mirae Asset Emerging Bluechip, and L&T India Value Growth fund via SIP route. My aim is mainly wealth creation and im in the market for 8yrs. Could you kindly comment on the portfolio and any recommendations if needed?

Amit Trivedi: Let me congratulate you for starting early. However, there is something that I would suggest you do. Identify for what you would need the amount, and roughly how much. it is only then you can worry about the question: whether you would have that much money in hand or not.

guest: Hello..I have been investing in Mutual funds from 2 years.I invest around Rs 12000 every month in form of SIP in good rated companies recommended by your site. But I have earned very less profit i.e just Rs 900 in 2 years. Kindly advise how to select MF to earn maximum returns

Amit Trivedi: First of all, two years is too short a period to talk about when you are investing in equity mutual funds. Second, since you are investing through SIP, it is only the first instalment you invested that has completed two years. The rest have not even completed two years. Investments take time. If you have selected good funds, you got to give your funds time.

guest: Self invested in Mutual fund Rs 23000.00 p.m in various larcap,multip cap,mid cap & mix fund since last 1 year. presently it is shown 20 % return . i have home loan consisted rs 28 lacks with Rs 45,000.00 p.m emi. My age is 50 year. wish to generate Rs 3 crore retirement fund after 10 years. Did i paid part amount of home loan from this mutual fund or taking advantage of IT deductions Rs 2 lacks till my retirement age? Primary goal is to generate retirement fund ,.

Amit Trivedi: My personal view is: it is better to get rid of a loan as soon as possible. I believe that having a fixed liability (EMIs) and a risky asset is a difficult combination to handle. Having said that, consider this question: would you borrow money to invest in equity? If the answer is "no", then you should also pay off the loan first. If you are comfortable taking loan to invest, decide your limits and then take a decision.

guest: Hi My networth as on date is about Rs.35,00,000/- comprising of Mutual Funds (Rs.25 lakh), Equity (Rs.5 lakh) and other savings (No loans). My portfolio is mainly built through monthly SIPs started about 5-6 years back. I have recently started P2P lending with small amount, but would like to make it a significant portion of my portfolio in some time. Since we have 2 family houses, I don\`t intend to invest in another house. I have term insurance policy of Rs.1 Crore. I have a son (8 years old) and wife who are dependent on me. I am presently in a job (monthly net: apprx. Rs.1 lakh, surplus: Rs.50,000 after all expenses) but intend to quit it in 4-5 years time and start something which do not tie me down like a salaried person and also ensure some monthly income. Kindly guide me as to how should I plan my investments for next 4-5 years to create a good wealth (may be atleast double my networth from today?

Amit Trivedi: I liked your clarity of thoughts. The only thing I have to comment strongly on is the P2P lending business. Please remember P2P lending is a very high risk business. Unless you are an expert in analysing and pricing credit risk, your risk-reward ratio could turn severely against you. The risk in this type of activity comes largely from your ignorance. If you have sufficient knowledge of how to analyse and price each individual proposal, stay away. Since you are considering to start on your own within the next five to six years, start building a portfolio of fixed income assets (debt mutual funds), so that when you want to quit, you are not completely at the mercy of the risky assets - equity mutual funds and stocks. With a combination of appreciation on your present portfolio, and additional monthly investments, you can plan to achieve your goal of doubling your net worth. It is possible.
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