To answer these and various other money and invetsment related queries, financial planning expert Vetapalem Sridhar, hosted a chat with GA readers on September 10.

For those of you who missed the chat, here's the unedited transcript:

MFQuery asked, Hello Sir, I want to start SIP of Rs.7000 in following mutual funds 1)HDFC [Get Quote] Equity �G 2)Magnum Contra-G 3)DSPML TIGER-G 4)Kotak Opportunity-G 5)Reliance [Get Quote] Growth-G Currently I have 2 ELSS funds- (Lumpsum amount Invested) 1)SBI [Get Quote] Mangum Tax gain �G 2)HDFC Tax saver-G Are these funds makes good portfolio or some changes required? Also please suggest me how much amount I should invest in each of these funds from Rs. 7000

Vetapalem Sridhar answers, Hi! Most of the funds picked by u r aggressive (primarily midcap oriented). Portf basics suggest that ur core portf should consist of large cap stable funds. Invest in 4 funds. 2K each in large caps funds � Along with Magnum Contra pick something like HDFC Growth or Reliance Vision. Other than this pick 2 aggressive funds of 1.5K each from the other funds that u have mentioned. DSPML TIGER is thematic fund.

kishore asked, Hi sir,i am a college fresher(22y old) with a package of 6lpa.Please suggest me a financial planning.Is it good to take a Home loan,if it is how much home loan i can take.Please tell some ways so that i could get some good returns in 5 years and good tax benefits

Vetapalem Sridhar answers, Dear Kishore, it is gr8 to see that at such a young age u realise that some kind of effort needs to be put into planning about ur money. First and foremost spend time and effort trying to understand and learn about investment from unbiased sources. This will be the best investment that will yield u the maximum returns in ur life. I think initially u should focus on accumulating some funds, as to buy a house u would need money for downpayment. Never take a Personal Loan for downpayment. Focus on post tax returns and not on saving tax at any cost. U can consider investing in a ELSS scheme for tax saving. Also would suggest that with a 5-7 yrs start to build funds by doing a SIP into Mutual Funds. Some fund options r HDFC Growth Fund, Reliance Vision, Sundaram Select Focus, SBI Contra, etc...

saurabh82 asked, Hi, what is the advantage of SIPs over closed ended mutual funds?

Vetapalem Sridhar answers, Some of the Advantages of a SIP are: 1. There is disciplined investing as money directly goes from bank (in case of Auto Debit instruction is given) or thro post dated cheques given to the MF. 2. Convenient for persons who can save small amounts every month and want to invest into equities. 3. Averaging of cost of units purchased as they are purchased at different points in time. In a SIP u can withdraw money whenever u want, but in a closed ended fund the money cannot be withdrawn till the completion of the tenure. In case of a closed ended fund u have to put in a lumpsum amount as investment. So it is not suitable for people who can save smaller amounts regularly.

Mittal asked, Hello Sir,Good afternoon. I what some guidance regarding tax saver and benificial investment. i have consultancy income of Rs.3,00,000/- p.a. so, which is the good benificial investment for me. which is save my tax.please give your appropriate guidance to me. I will be thankful to you.

Vetapalem Sridhar answers, Hi! If u do not have adequate insurance cover, get urself an adequate TERM Insurance cover. The premium for it comes u/s 80C. Over and above this ELSS mutual fund is a gud place to invest to get Tax benefit and at the same time make ur money grow. Invest in a ELSS scheme with a 5-7 yrs horizon. U can look at Sundaram Taxsaver and HDFC Taxsaver as options.

merav asked, Hi, Mr. Sridhar. Good Afternoon to you. How r u doing?? I am 28, CTC 3.6 lac per annum and having one dependent. What proportion of Equity & Debt i should have in my portfolio??

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Vetapalem Sridhar answers, Hi Merav! There is no standardised debt-equity (asset allocation) ratio for everyone. It depends on a lot of factors specific to each individual. But to invest in equity it is important that u have a long term horizon. All money that u do not need for the long term (5 yrs or more) should definitely go into equities. For more clarity read thro the following article which I had written on Asset Allocation. 

Mani asked, Dear Mr Sridhar, WHAT IS THE BEST COMPANY TO START A SIP PLAN ACCORDING TO YOU LOOKING AT NEXT 15 YEARS?

Vetapalem Sridhar answers, Hi Mani, it is not possible to know before hand which funds will perform in future. Also 15 yrs is a long period and factors which ensure success of funds keep changing over time. So it is necessary that u evaluate ur funds periodically (maybe every yr). Replace a fund it is a poor performer. Ideal holding period for a fund should be around 3-5 yrs.

reddiff asked, Dear Sir, I wanna to save about 60K for tax rebate. Am 27 years old and have a LIC [Get Quote] policy of 2 Lakhs as sum assured with 6K as premium.Please advise me, is it wise to go for a Term Policy as I feel that the existing policy is not sufficient? And where can I dump the remaining amount as it is not required for short term?

Vetapalem Sridhar answers, Hi! TERM Insurance PREMIUMS have fallen by around 30-40% across the board during the last few days. It makes a lot of sense to take up adeqaute TERM insurance cover for a 12-20 yrs period. During this period invest money wisely so that u build enough funds that the need for a Insurance cover is no longer there when the Term cover gets over. Invest the remaining money into a ELSS fund which will enable u to get Tax benefit.

gopi asked, Which is the best way of investment. MF or fixed or Postal or Gold or Real-estate??? pls suggest

Vetapalem Sridhar answers, Dear Gopi, each investment option is different and is suitable to meet different needs. First analyse wat is it that u want from ur investment. This should guide u in selecting that option which best meets ur need. A FD is definitely better than Postal savings currently. For equity oriented MFs u should have a 5-7 yrs horizon of investment.

sanju123 asked, Hello Sir, I saw the http://www.amfiindia.com/ website and found that the sell price value (Sale Price of NAV) of Open Ended Growth Schemes are higher than actual NAV value. but in case of Open Ended Income Schemes the NAV difference is very less. Can you please explain Why this is so?

Vetapalem Sridhar answers, In equity funds there is an entry load over the NAV. So the selling price shown will be higher than NAV to the extent of the load. Whereas in case of most income (debt) funds there is no entry load, but there is an exit load. Hence u will find the selling price equal to the NAV in that case.

Sunil asked, Hi. This is Sunil. Good afternoon. I am 56 years old. I am a salaried employee drawing 12 lakhs C.T.C. p.a. What proportion of my salary I could safely invest in stocks? I will be entering into this stock /shares investing for the first time.

Vetapalem Sridhar answers, Dear Sunil, I would suggest that u invest into equities thro the Mutual Fund route. Proper planning is needed at this stage for u to decide on a suitable asset allocation. As u r nearing retirement and also there maybe a number of responsibilities (eg:chid education & marriage) that need to be taken care of at this stage. Estimate that portion of money that u r certain that u will not need for the next 5-7 yrs. This is the money that can be considered for equity investment. Making money in equity is easy if u understand wat is written in the following article: Stocks - long term investing.

Sandip asked, HI, i am Sandip, working professional, presently having a portfolio of 6.5lac in Mutual FUnd & 1.0 Lac in Equity. The MF portfolio is currently at a loss of around 1.8lac. I have personal loan and car loan also running simultaneously. My Annual Income is 7.2 lac. Please suggest, how to manage all these

Vetapalem Sridhar answers, Hi Sandip, most investors r sitting on a marked to market loss. Have patience and remain invested. If the interest charged on ur P/L is more than 18% IRR, would suggest that instead of doing any more investments into equities, collect money and prepay the P/L. Othewise continue with regular invests. Let the Car EMIs continue.

sujeet asked, Hi Vetapalem Sridhar, hope you are doing well; I have a SIP of Rs1000/month in mutual funds HDFC � top 200, Reliance vision fund, Fidelity from past 18 months. All of them are of dividend option, now I desire not to receive the dividend as I wish to accumulate for the long term. Please advise whether I should go for the dividend reinvestment plan or switch to growth option. Many thanks in advance

Vetapalem Sridhar answers, Dear Sujit, a GROWTH Option would be best. Funds r gud.

sandyRoorkee asked, Hi Sir, I want to take a Life Insaurance Policy. Which should I take? My age is 26, Single. Some friends suggests me to go for LIC, is it Good?

Vetapalem Sridhar answers, Hi, take up adequate TERM Insurance cover. Some of the options available are Reliance TERM Plan, ICICI [Get Quote] Lifeguard WROP, SBI Shield, Kotak Term Plan, etc. If u r looking at returns then Mutual Funds should be a better option than Insurance.

SRK [Images] asked, I am 47 and want to retire at 60. I think i should entire money in equity as i dont need the same till age 60. Your comments

Vetapalem Sridhar answers, Hi! Putting all ur eggs in the same basket is not advisable. U should keep adequate debt exposure to take care of any emergencies and those needs that r going to come up over the next 5 yrs. A careful study about ur lifestyle and future needs would enable u to arrive at a suitable debt component that u must maintain.

ASHISH asked, Dear Shridhar, I am investing in the following funds through monthly sip hdfc growth,dspml top 100, tata infra,franklin prima plus,magnum tax gain, kotak 30 and rel. vision. I want to start rel. reg. saving. Kindly advice me. My time horizion is 7-8 yrs.

Vetapalem Sridhar answers, Hi Ashish, u already hv 7 funds in ur portf. 5-6 funds r more than sufficient to build a gud portf. Adding more funds is not recommended. Most funds u hold r already reasonably gud.

bobo asked, Good Afternoon. Though I have a good mix of mutual funds, almost all of them have been doing badly for the past 6 months. All of them are reputed funds. Should I just wait for another 2-3 years before expecting good returns?

Vetapalem Sridhar answers, The reason for this is the fall in the stock markets. Analyse the preformance of the funds with respect to the perofrmance of the Sensex during the same time. U should continue to invest into the funds regularly and maintain a 5 yrs horizon. U will make reasonably returns over this horizon.

krishnasuresh asked, Why do you people keep suggesting funds from bigger fund houses. There are funds from smaller fund houses that have done very well. Can you explain

Vetapalem Sridhar answers, Hi Krishna, the reasons maybe manifold. It may vary from people recommending funds based on commissions they recieve to finding comfort in size. It is true that some of the smaller funds r doing very well. From this we can easily infer that it is not possible to know before hand which funds will perform in future. If people had know beforehand then the smaller funds would not haven been smaller. There r some factors that u can evaluate to shortlist funds - fund management quality, fund philosophy, charges, track record etc. Plz read thro the following article to know more about them. How to select a good mutual fund A Slide Show, click NEXT to read thro.

Mani asked, Mr Sridhar I Have 20 Lacs right now. Whats the best way to make it 1 Cr in 7 years

Vetapalem Sridhar answers, For that to happen the 20L should grow at a rate of 27% annualised return. The expectation is on the higher side. With a 20% annualised return the money shoudl grow to 1 Cr in around 9 yrs.

nayan asked, hi, my income is of around 8 lacs, my yearly expenditure is of around 3.5 lacs, please let me know where can i invest balance 4.5 lacs, i have an SIP in hdfc for Rs. 5000 per month and another 2 lacs in Fix Deposit, also have around 50k in mutual funds.

Vetapalem Sridhar answers, Dear Nayan, if u r married and this is ur savings ratio, then u can achieve Financial Freedom is around 10-15 yrs time. I would suggest that u should build funds by doing a SIP into MFs for that part of savings which can be invested with a minimum 5-7 yrs horizon.

advise asked, Hi Sridhar, Can NRI transfer the amount from his NRE account into his savings account and put into fixed deposit.

Vetapalem Sridhar answers, U can tranfer the money into a NRO account and do a FD from there.

amrit asked, I have savings of 10 lakhs. I am going to a buy a flat worth Rs. 8 lakhs in a suburban area. Shall I buy the flat with my savings or do I take a home loan and invest my savings somewhere else? Thanks.

Vetapalem Sridhar answers, Dear Amrit, it is a very simple decision. Take up a housing loan and invest the money wisely. Take a floating rate loan and a 15 yrs tenure for the loan. Invest a gud portion of the money into equities thro the Mutual Fund route with a 10 yrs horizon. U can enjoy tax benefits on the housing loan.

Siddhartha asked, Hi Sridhar, I am having an apartment with HomeLoan. I am an IT professional working in Indian IT farm.I am getting a significant amount of allowance beside my normal salary for working in Outside India. I want to invest this in a new apartment, and the remaining I will prepay my Home Loan. Is this the right decision or I should try to preclose the loan first then look for investment? Please suggest.

Vetapalem Sridhar answers, Hi! When u already have one property and have a loan for it, the decision of taking another property on loan should be evaluated properly. It would mean that u r leveraged (ur own money as against money from the loan) and most of ur money is locked up in a single asset class - real estate. It is always recommended to maintain a suitable asset allocation. The decision is more individual specific. Though it would be more wise to hv atleast some money into other assets like debt and equity before going all out behind real eastate.

bhavna1 asked, Sir i seek your advice on investment being made in nabard bonds.I have a 4 yr old son and apart from the regular savings being done for my son's benefit , i want to invest a major portion in nabard bonds for 10 yrs, pls advice whether i should go ahead or not.

Vetapalem Sridhar answers, I think there was some ad in newspapers for investment in Nabard Bonds during this week. The return there is around 8-8.5% annualised for a 10 yr period and not 12%. With such a horizon equities can definitely deliver far better returns. Bonds may not be such a gud idea.

HouseLoan asked, Sir I have taken a HomeLoan of nearly 15 lakhs 4 years back for a period of 15 years.now its period has drastically increased to 35 years. I am thinking of increasing my EMI by Rs 6000/-. Is it good idea to increase the EMI by 6000/ or pay one installment of EMI every 2 months to reduce the principal? Kindly suggest. I wanted to use the 1.5 Lakh of interest to avail the tax saving provision on Home Loan.Sould i pay a payment of 50K or 75K right away to reduce the 35 years payment duration? Within this time i have realised that i haven't even paid back one lakh of the principal back. Kindly Advice..Ritesh

Vetapalem Sridhar answers, Hi! I think it would be better to collect money in ur bank and prepay some lumpsum amount every few months instead of increasing ur EMI. This would ensure that ur commitment towards mthly outgo would remain same as before. At the same time whenever in future the interest rates reduce the tenure will automatically reduce. Interest rates will not remain high forever.

NKS asked, Mr Sridhar: Do you see any major upside as far as the sensex/ nifty are concerned? If yes, over what period of time, and what levels do you think they will touch?

Vetapalem Sridhar answers, It is not possible to predict how mkts will behave in the short term. It seems tht the mkt is range bound. There r a number of things that need to become clear before the mkts really move up - elections in India, Financial problems in US, Inflation etc. This is wat we know. Mkts have fallen and are currently at lower levels. U should buy LOW and hence if u have a long term horizon, it is a gud time to invest.

mkk12 asked, hi my salary is around 40K per month, as per home loans rule i can get around 23-25L loan. I have car loan which take aroun 10k per month for me for next 2 and half year. I want to buys a propery of around 28 lakhs. I can manage 3 lakhs as downpayment. But that makes aroun 27 K (home loan for 20 yrs) and 10 K (car load for 2.5 year) do you suggest me should i go for home loan or not? Although it is clear that it puts me only 3K (27+10+3=40) in hand for next 2 years not cosidering any salary hike. but inflation in property prices are worrying me. what do you suggest?

Vetapalem Sridhar answers, Hi! I think currently banks r giving around 4-5 times annual gross salary as loan. So u would get a loan of around 20-23L as loan. U already have a Car loan. This would further reduce ur eligibility. Consider this option. Think of buying a smaller property (1BHK) of around 20L. Remain invested for 3 yrs. During this time ur car loan would be over. After 3 yrs sell this property and buy a bigger one. Any rise in property prices should not impact u too much as u will sell an existing property to buy another one.

moredeep asked, I have invested around INR 15 lacs in MF. Also I have a house property worth Rs. 25 lacs at Thane in addition to a flat in Thane. I intend to build a house at Pune on a plot bought by my father. Should I liquidate my MF and do it or should I dispose off one flat worth Rs.25 lacs at Thane for the same. Please advise.

Vetapalem Sridhar answers, Hi! If u eventually plan to sell ur property someday, then it makes sense to sell it now itself. As this would enable u to plan ur tax part effectively and also ensure that all ur money is not into real estate. Though before u decide on it a lot of other factors need to be evaluated.

neetu asked, Hi Sridhar, as u say that if u want to save for ur childs future, we as parents should invest in mutual funds rather than ulips, but dont u think that if we invest in mutual funds we will always have the tendency to withdraw it in need. so do u still suggest that savings for children should be done in mf's only.

Vetapalem Sridhar answers, If u r responsible parents, then I do not see any problem in building funds thro Mutual Fund investments. But if someone feels that they cannot take up the responsibility of managing money and creating enough funds for their children thro Mutual Funds, then some kind of lockin product should be picked. Money can also be withdrawn from ULIPs after completion of 3 yrs. Where would u go then?

Vetapalem Sridhar says, Friends it was gud answering some interesting questions today! Have run of time now...Will be back soon...