The best investment options for YOU

As an investor expecting decent returns, you have a number of investment opportunities open to you. Be it investing in equity, mutual funds or insurance, you are spoilt for choices.

But do you know the investment mix that can give you the best returns? Should you put your money in mutual funds? If yes, then should you go for sectoral funds or diversified equity funds?

Should you invest in an equity linked saving schemes or a diversified fund? If you want to insure yourself in order to protect your dependents, should you go for unit linked insurance plans, ULIPs, or a mix of term insurance and mutual fund investments?

Wealth management expert Sanjiv Mehta discussed wealth and mutual fund-related aspects in a chat with Get Ahead readers on June 27.

For those of you who missed it, here is the transcript.

Part I: How to secure your financial future

Part II: Have mutual funds become a risky investment

Prashant asked, I am 26 years old, working in a software firm as a senior software engineer. My monthly cash in hand is almost Rs 28K per month. I am single and living with my parents. My expenditure is nominal. Can you suggest where should I invest to get good returns? I am looking to get some handsome money in 3 to 5 years so that I can buy a home and car.

Sanjiv Mehta answers, A generic answer to this question is invest in owning your own accommodation since that goes a long way in increasing your net worth. Rest can be invested in equities.

roy asked, Hi Mr Mehta, When to decide of selling a mutual fund in the long term?

Sanjiv Mehta answers, Selling is dependent on two factors -- one is your own goals. If your goals are being achieved, then it is prudent to cash out. Second is the economic cycle stage: if for example, inflation starts picking up, interest rates keep on climbing (both are directly related; if one increases the other follows and vice versa) then it will be good to switch from equity mutual funds to debt mutual fund.

roopakjakhmola asked, Hi Sanjiv, which is a better option growth or dividend mutual funds?

Sanjiv Mehta answers, Growth and dividend both have identical returns. There is a small taxation issue here. Dividends on equity funds are free from taxation; however, short term capital gains are taxed at 10 per cent if sold within a year of investing. If you intend holding the fund for a shorter period of time, the dividend option will be better.

Mukund asked, Good afternoon Sir, will it be wise to invest in sector funds like power, media?

Sanjiv Mehta answers, Diversified is better than sectoral since depth in sectoral is less and it is very volatile.

AYBA asked, ULIP or Term Insurance + Mutual Fund? Which is the best option?

Sanjiv Mehta answers, Looking at the present performance and costs, term + mutual fund is better.

abhay asked, Hi Sanjiv, for passive investor with a 10+ years horizon, how would you compare direct investments in equity, primarily large caps, to investment through mutual funds that invest in similar stocks?

Sanjiv Mehta answers, Just a question of control vs convenience. Important thing is to be following good principles of investments in both.

Manu asked, Sir I have invested in Relaince Growth, Relaince Vision, SBI Contra and Global Funds. Is it a good investment?
Sanjiv Mehta answers, All of these have performed well and are rated very well.

pm asked, Whis is better -- investment in ELSS or Equity Diversified fund? If I have invested full Rs 1 lakh in conventional savings, is it wise to still go for ELSS through SIPs? I mean to say, portfolio wise, is ELSS better or diversfied equity funds are better?

Sanjiv Mehta answers, Same performance over a long term for ELSS and non-ELSS funds. However ELSS is much better than conventional savings.

HS asked, Hi Sanjiv, given my lifestyle I know if I had Rs 75,00,000 today I would be able to spend the rest of my life fulfilling all my dreams given the current cost of living. How do I extrapolate that to know my future financial need?

Sanjiv Mehta answers, You can calculate pmt for different rates for example of 9 per cent, 10 per cent, 12 per cent and so on. You know your time horizon and you will have a fair idea of how much you will need to save every month.

Sanjiv Mehta says, It was very nice interacting with you. It was very difficult to answer all the questions, but I hope that some answers were generic enough. Looking forward to another chat soon.