Public sector undertakings are perceived to have untapped potential. How should one evaluate a PSU’s upcoming initial public offering vis-à-vis a private company. Is it wise to give PSU stocks a premium, as an investor cannot go wrong when it comes to promoters?
A basic check on the quality of management, balance sheet, business and track record, would give a qualitative feel of the stock. Any stock, whether PSU or not, if it passes the muster on these checks, can prima facie qualify as an investible stock. However, it would be improper to paint all PSU stocks with the same brush. There are several PSU companies which have a progressive management and, hence, have done well. On the other hand, there are many more which have, over the years, failed to deliver.
I work with a public sector bank and my annual salary is about Rs 3.17 lakh. I need to invest Rs 30,000 for tax saving purpose. I would like to invest in equity-linked savings schemes. What should I keep in mind before investing? Also, I am going to get around Rs 3 lakh (my EPF corpus) from my previous employer. Should I invest the amount directly in equities or through mutual funds?
You must look at the long-term performance record of the equity-linked savings schemes you wish to invest in, apart from the quality and size of the asset management company. Consistent and above average performance of a fund from a large asset management company, can easily qualify for investment. Money received from your provident fund, should ideally be invested in a fixed return instrument (like fixed deposits, Public Provident Fund, National Savings Certificates etc) rather than equities.
I am 36. My takehome salary is Rs 21,150. I have a six-month old daughter. I have started investing in mutual funds through a systematic investment plan (monthly investment equals Rs 7,000) in equity-diversified funds. I want to invest Rs 20,000 in direct equity for my daughter’s marriage and block the amount with a long-term perspective. How do I choose the scrips to invest in? Also, if I systematically invest Rs 7,000 over the next 15 years, what corpus would I accumulate?
For retail investors, mutual fund SIPs are usually the most advisable for investing in equities. Direct investing in equities is not advisable, thanks to the volatile nature of the markets. It’s hard to predict returns from equities. However, going by past experience, it would be safe to assume at least a 10 per cent compounding over the next 15 years, if you stay invested in a good fund.
I purchased 2 kg silver when it was trading at Rs 32, 000. With silver prices being very volatile, should I hold on to it or book profits?
It is possible for the volatility to continue in the near future. However, silver’s fundamentals look promising over the long-term. Hence, it will be advisable to hold on to your investments.
The writer is managing director & principal portfolio manager, Capital Portfolio Advisors. You can send your queries to yourmoney@bsmail.in.
