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Chat Transcript

Harshvardhan Roongta

CFP , Roongta Securities

Financial Planning and Asset Allocation

 

Questions Answered

Q

guest: Hello I am a home maker and I want to invest my savings in mutual fund, please suggest

Harshvardhan Roongta: It is nice that you wish to invest the surplus that you have for future needs. Mutual funds offer all kinds of products catering to different types of investors and suitable for different timelines. Before, i can suggest a suitable scheme(s) i would need to know the amount that wish to invest, the duration for which you need to invest for and also a bit about your risk profile. Please write back with more information so that i can help you create a portfolio.
Q

guest: Hi, i took Home loan from ICICI home finance company (HFC) in 2013 of 21 lacks. Current interest rate is approx 9% and they are ready to lower it to 8.7% by providing processing fees of 2500 rs. Current year i have paid 1.88 lacks as interest and 65K as principal amount. Shall i switch to other banks like SBI who agrees to provide approx 8.4 % interest. I wish to continue the loan for long term, not going end it with near feature. I have heard the government is working on shifting old loans scheme (like mine) to new loans scheme. Shall i wait for government decision, or go with low rate offered by ICICI HFC or shall i switch to SBI ???? Thats the confusion.

Harshvardhan Roongta: Theoretically speaking why pay a higher rate of interest in ICICI ( 8.70% after revision ) when SBI is offering you @8.40% . However, practically speaking its far more convenient to just stick to ICICI and continue the loan. The processing charges levied by ICICI is Rs. 2,500/- however, when you switch your loan to SBI, i am sure that the processing charges will be higher. Therefore, your decision should be depended upon two parameters 1) The convenience and 2) the total costs. Evaluate both the options before you on these and then take action. If i were you, maybe i would be simply lazy and continue with ICICI @ 8.70% :-)
Q

kiron59: Which is the best mutual fund category to invest for long term returns in 10 years with moderate to high risk? Is mid cap give returns mostly higher than multicap.

Harshvardhan Roongta: MidCaps are relatively more volatile than Multicaps. Over long term, multicap funds would be better as that leaves the discretion with the fund manager to pick mid caps albeit selectively. In the dedicated midcap fund, the fund manager has to invest in midcaps only, hence even if there are no good investment ideas he/she will have to pick something (which may not necessarily be the best company in the midcap space). Hence, i would favor MultiCap Funds over Midcaps.
Q

guest: Hi may i have to know what is the meaning of capital gain tax how it effect on my mutual fund investments

Harshvardhan Roongta: Its a very long topic to explain via this chat. You may look up articles on moneycontrol.com on this topic which have been explained in very simple language and with examples. In a nutshell, LTCG tax @ 10% will be levied on equity mutual fund schemes from 01 April 2018. Gains upto 31 Jan 2018 have been grandfathered. As stated, for detailed understanding with examples, search for articles on moneycontrol.com
Q

guest: I am 30 year old. Planning to get married this year. monthly SIP of Rs18000 in MF past 2 years.Insurance of 300000SI.want to purchase an individual house of 50L. Should I stop SIP and continue paying Loan. monthly income 50k.

Harshvardhan Roongta: If you have a housing loan, then the EMI needs to given first priority and paid off. With an income of Rs. 50,000/- p.m and a loan of Rs. 50 Lakhs, the EMI itself would be around Rs.47,000 to 50,000/- p.m. I dont think that a bank would grant you a Loan basis your income alone. Lenders assume that you can use 40-50% of your take home salary to service the loan, hence loan equivalent to Rs. 25,000/- EMI would be what they would be comfortable with i.e about Rs. 25 Lakhs. So if you have to pay Rs. 25,000 as EMI out of your income of Rs. 50,000/- then there would not be much left to invest after household expenses. So if you take a Loan SIP`s would anyways stop or reduce.
Q

guest: Ive Rs 25 lacs to invest . I Want to know as to how to invest this money in M F for 3 to 5 years without much risk of losing capital.pl suggest

Harshvardhan Roongta: For a period of 3-5 years without the risk of loosing capital : you should look at investing in hybrid schemes that invest predominantly in Debt ( about 80%) and upto 20% in equities. Schemes such as : Birla Sunlife MIP Plan and ICICI Regular Income Fund would be suitable. These two schemes have been named to give you a sense of the kind of schemes that you should invest into..however, considering that you wish to invest Rs. 25 Lakhs, you may look at investing in 4-5 schemes in all instead of just 2 as named above. Find out more about this category of funds and if you are fine with the same you may write back for more scheme options.
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