Do you want to achieve financial freedom as early as possible? You want to but don't know how to do it? Do you know the principles that make up for successful financial planning?

Do you save a decent part of your salary and want to invest it in good mutual funds? How much saving is enough for you to begin investing in mutual funds for the long term? What are the returns that you can expect?

You have bought more than half a dozen mutual funds and want to pare your exposure so that you can focus only on a few? Which are the best mutual funds to invest in for the long term?

In a chat with Get Ahead readers on December 5, financial planning expert Vetapalem Sridhar answered these and several other queries related to financial planning and freedom for you and your family.

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

Part II: 'Financial freedom is all about discipline'

Suresh asked, GoodAfternoon Sridhar.I have Rs.10000 every month after all my monthy expenditures are done.Could you tell me what principles should i keep in mind while financial planning? Could you provide a basic plan also?

Vetapalem Sridhar answers, Hi Suresh, There r simple rules that u should keep in mind regarding Financial Planning.

1. Have clear defined objectives in life.

2. Never mix Insurance and Investments.

3. Ur risk profile does not depend only on ur feeling of fear. It primarily depends on the horizon of investing. The longer the horizon, the more is the risk taking ability.

4. A suitable Asset Allocation Plan (Debt/Equity/Real Estate) is the key to long term success of a Financial Plan.

5. Be aware of wat is happening to ur money, even if u r taking external help. Unless u put persomal effort the money will not grow to the best of its potential.

NBH asked, Hello Sir, I can save around Rs 3000 each month after all my expenses. I have to pay premium of around 12000 on my LIC [Get Quote] I want to invest in ULIP which would be best for me to invest?

Vetapalem Sridhar answers, As u have already invested in a LIC, I suggest that if investment is wat u r looking for, then u should look at a diversified Mutual Fund with a 5-7 yr horizon. It would enable u to make more returns than a ULIP over the long run.

Jeba asked, Hi Sridhar I earn Rs. 13000 per month out of which Rs. 5000/- is the monthly expenses invested in LIC annually Rs. 22,000/- Invested in Money Plus Rs. 10,000/- annually Started investing in PPF. planning to invest in MF Kindly Suggest what should be my strategy in future to secure a flat?

Vetapalem Sridhar answers, If u plan to buy a flat in 2-3 yrs time then, MF is not the place that u should invest. U should look at collecting the money reqd for downpayment in a bank FD. Also instead of putting money in a PPF a/c (which is for 15yrs), this money should be directed towards Mutual Funds.

JKV asked, Sir, If have to choose 2 of the following MF for a period of 10-12 years on SIP basis, then what will these two: hdfc growth kotak opportunity sundram select focus magnum contra dsp ml tiger I am already investing in the following: sbi tax gain reliance tax gain franklin india prima plus reliance vision reliance power sector tata infrastructure.

Vetapalem Sridhar answers, Considering ur existing portfolio I would suggest HDFC [Get Quote] Growth and Magnum Contra. Do not increase any more ELSS funds. Sectors funds r not such a gud idea unless u have really done ur research on the sector. Ideally u should have between 4-6 funds to build a gud portfolio.

cinki asked, 4 months back I have started 4k per month SIP for following funds FIDELITY EQUITY FUND GROWTH HDFC PRUDENCE FUND GROWTH OPT. DSP ML TIGER FUND GROWTH OPTION HDFC TOP 200 FUND - GROWTH OPT. SBI [Get Quote] MAGNUM GLOBAL FUND - GROWTH ICICI [Get Quote] SERVICES INDUSTRIES GROWTH RELIANCE [Get Quote] GROWTH FUND - GROWTH PLAN PRU. ICICI EMERGING STAR FUND - GROWTH FRANKLIN INDIA OPPORTUNITIES FUND - GROWTH IS this a right choice? I also hv FDs worth 5 lacs, debt free residential property worth 60lacs and debt free commercial property worth 15lacs (market value). My take home after all taxes and expenses is approx 1.3lacs per month. How much do u think i need to save and where to invest to accumulate enough which will give me 1 lac monthly income 15 years down the line after considering inflation..Is it a far fetched dream?

Vetapalem Sridhar answers, U have not mentioned ur age. But assuming that u r 40 yrs old. If u invest around 60K p.m. from now on for the next 15 yrs in diversified equity MFs, then u can withdraw equivalent to 1L (close to 2.9L pm then) in today's terms for the next 50 yrs. U have too many funds. U can look at reducing the number.

Sukhi asked, Can you let me know some good investmemt options within the range of 10000-15000 per month which provide excellent results after 4-5 years?

Vetapalem Sridhar answers, U should look at doing an SIP into 2-3 funds to begin with. U can pick one of the ELSS funds. For the other u can look at HDFC Growth Fund, Sundaram Select Focus, Reliance Vision and ICICI Pru Dynamic Fund.

kk asked, can you suggest me some mutual fund investment plans for children below five?

Vetapalem Sridhar answers, It is better to invest into regular diversified Mutual Funds in ur own name for the sake of children. Put them as the second holder with ur spouse as the gaurdian. This makes operational activities easy. Also read thro the following link to know about investing for children. It is a slide show so click NEXT to read thro. http://specials.rediff.com/getahead/2007/aug/07sli1.htm.

neeta asked, Hello Sir, i earn 18k pm and have a expenditure of 10-12k pm, can u suggest for me the financial plannings? I am 37yrs with one 8 yeras old daughter.

Vetapalem Sridhar answers, Hi Neeta, U and ur Husband need to take up a TERM Insurance. Of the 6K tht u r able to save, divert that portion which u will not need for atleast 5 yrs towards an SIP into a diversified Mutual Fund. This should help u build funds that would take care of ur daughter's future needs.

Madhu asked, Hi Sridhar.. Good afternoon.. I am working in an IT firm.. I am getting around 17k at hand.. being an employee , i am not too sure to achieve financial freedom in a couple of years.. What are my options for earning? What do you suggest of network marketing? I have seen people who were commmitted part time, for 3 years peoriod of time, achieve financial freedom. Want your suggestions regarding it. Thanks in advance.

Vetapalem Sridhar answers, I personally do not believe in the Network Mktg concepts that r floating around. It would be much wiser to spend the same time to learn about investing and managing ur money better. Over the long run by investing wisely, u can build much greater wealth thro investing ur savings wisely.

Padma asked, Good Afternoon Sridhar....Including my husband's and mine, the take-home salary comes to Rs.60k.We don't have any dependents and children.Our goal is to get a car worth 5lakhs in next year (may be through loan) and start saving for children from next year (as we have planned for a child next year).We have our own house with the outgoing EMI of Rs.26k.Also personal loan EMI of Rs.8k which will get over by this september.We are looking for a good monthly income after retirement and good education for our children, ofcourse some funds for their marriage too. On top of this, as a salaried professional, we are investing Rs.1lakh each in MFs and ULIP. Can you please suggest a good financial planning for us? Are we supposed to trim anything in our current outgoings?

Vetapalem Sridhar answers, Dear Padma, It is gud to see that u have clearly identified ur future needs/objectives. The first thing to ensure is that u have adequate TERM INSURNACE cover. If ur loan guys have bundled a Life Cover, plz check up whether this cover lasts for the entire term of the loan. A lot of such covers last only for 5 yrs, which only protects that loan providers. Do not take any more Personal Loans in future. Continue investing into Mutual Funds. Also do not add any more ULIPs. Continue the existing ULIP till the end of its tenure and not only for 3 yrs. At a basic level these r the things that u MUST do.

prithvi asked, Hello Sridhar! I earn Rs 8000 p.m. I want ot start sip of Rs 500 each in 2 good mutual funds. My investment period is of at least 3-5 years. Are SBI mutual funds good? If yes pls suggest 2 good MFs from SBI.

Vetapalem Sridhar answers, I would suggest u to pick SBI Contra and HDFC Growth. It is better to put money into different Mutual Fund companies.

Juhi asked, Hello Mr. Sridhar I understand from your earlier advices and articles that SIP is the best way to invest in MFs to reduce risk to certain extent. However, my monthly income is not fixed as I am a small time self-employed person. But in some months, I do get a decent surplus income to invest. Not knowing much about MFs, I have been playing safe for the last 1 year by taking short term FDs. But I know that it is not entirely correct. Please advise for example what should I do if have a surplus amount of Rs. 10000.00 today and not requiring that amount for the next 3 -5 years. Just to mention, I don't have much financial backing to play in the 'high risk zone'. Would you still advise to go for SIP by breaking the above 10K into 5 or 10 parts and spread it over several months? Thanks.

Vetapalem Sridhar answers, Plz understand that there is no problem in investing in lumpsum amt into MFs. If u have intermittent income flow, then by all means u can invest when u have surplus money. SIP is more suitable for those persons who have a fixed salary and who r not disciplined in their saving and investing. Creation of wealth (returns) is more dependent on the amount of time that u remain invested into MFs rather than the method of investing into Mutual Funds. U need to have a 5 yr horizon in the current mkt scenario to invest into MFs. If mkts correct by atleast 15-20% then a 3 yrs horizon maybe suitable.

Rajesh asked, Good Afternoon Mr. Sridhar I am 35 and single. Owing to financial crunch, I have only about 5 lacs invested in LIC and FDs and PPF put together. I have been doing good since last one year and I would like to have a plan for investment for my later years. I request you to kindly give a quick opinion about my current investment plan as below: a) 50% in secured returns like LIC, PPF, NSC, FDs etc [Obj: Retirement planning] b) 25% in Moderate Risk MFs- Balanced, ELSS MF schemes [Obj: Expenses for big events like marriage, education, travel, health issues etc] and c) Balance 25% in aggressive -- High Risk MFs -- Equity � Growth schemes [Obj: Capital growth]. Also, if you could please advise few good MFs for the above purpose where I can invest in? Thank you.

Vetapalem Sridhar answers, Following an Asset Allocation Plan is a gud strategy to meet ur future objectives. Probably u should look at increasing the ratio of money going to equities as u still have a lot of yrs of working left. For the core part of ur portf u can look at picking 3 funds from Reliance Vision, HDFC Growth, Sundaram Select Focus and ICICI Pru Dynamic, SBI Contra. U can look at adding a ELSS Scheme. For aggressive funds u can look at 2 funds from JM Emerging Leaders Fund, SBI Magnum Midcap, Franklin Opportunities Fund, Reliance Regular Savings Fund.

ravinderpal asked, Pls.suggest best mf & tax savers also as i want to invest rs.15000 per month through SIP.Already invested rs.350000.00, last year in Jeevan Plus of lic, is it a good one? regds.

Vetapalem Sridhar answers, Sundaram Taxsaver HDFC Taxsaver Principal Tax Savings Fund These r the ELSS funds in my watchlist. As an investment option Jeevan Plus may not be the best one. Mutual Funds should be a better option.

Part II: 'Financial freedom is all about discipline'

Vetapalem Sridhar is a financial planning specialist based in Pune. He can be reached at vetapalems@rediffmail.com.