I am a 22-year-old student. I want to start investing in the stock market with a long-term perspective. I work with a travel agency (for three-four hours a day) and earn Rs 5,000 per month. I want to invest small amounts regularly. How should I go about it?
Since you are new to investing and want to start with the stock market in a small but regular way, systematic investment plans of diversified equity mutual funds will be a good beginning. You can choose some well-performing funds and start a monthly investment plan for the desired amount, which will be debited from your bank account every month. This will lead to disciplined investing and allow rupee cost averaging, while leaving stock selection to expert fund managers.
Are sunrise sectors like nano technology or clean energy good bets? Would you advise investing in them?
Any new technology or process can either be a pathbreaking success or turn out to be a failure commercially. There are high risks as well as rewards in investing in these upcoming business ideas. Having said that, you need to assess your risk profile and portfolio size and decide if you want to invest in such sectors, and if so, how much.
I am a retired 62-year-old male. Recently, I sold my farmhouse in Panvel for Rs 29 lakh. Out of this, I plan to give Rs 10 lakh each to my son and daughter. However, I plan to invest the remaining in the equity market for my grandchildren (four- and seven-year old). I have a 20-year investment horizon. How should I choose the funds so that they earn me the highest possible return?
There are two ways of investing funds in the stock market. You can either invest directly in equities or invest in equity mutual funds. In your case, equity mutual funds could be a better option.
Since you have a long time horizon, you can opt for a mix of diversified equity funds, along with some mid-cap funds, which could possibly deliver higher returns in the long term, though they could be more volatile in the interim.
I have a stock portfolio of Rs 15 lakh. Recently, my relationship manager approached me asking if I wished to turn it over to a portfolio manager with a leading brokerage firm. She was not very articulate about the costs that I would incur. Can you tell me more about this? Also, what are the questions I must ask when I have my first interaction with the portfolio manager?
First, you must enquire about the costs for portfolio management. Most portfolio managers charge a fixed fee or a percentage of profits or a mix of both. You have to understand these costs well. In your meeting with the portfolio manager, you have to understand how they propose to manage your portfolio and whether it is in sync with what you desire.
Also, you should find out about their track record, portfolio constituents and the size of the funds they handle. You must understand that handing over your portfolio to a portfolio manager is a tradeoff between convenience and control. You should be clear about both pros and cons and take an informed decision.
The writer is director, Touchstone Wealth. Send your queries to yourmoney@bsmail.in