Subbu`s Solutions

Posted On Monday, Apr 13, 2015

  • Q1) I am fascinated by your honest views on Investor education and critical analysis of Brokers and Researcher in stock market I am now 69 and have some disposable income for parking for short time any help from Quantum.

    Thank you, Mr Madhavan, for your acknowledgement. Quantum has always walked the right path and will always do what is for the best interest of our investors’ money. Also when it comes to researchers in stock markets, there are very few who have a long term view, as they tend to look at maximizing short term gains, which may not be the best strategy always. As an investor, one should ideally have a long term view.

    Coming to your query Mr. Madhavan, if you wish to invest with us and by short term you mean 2-3 years then you can look at Quantum Multi Asset Fund#. This will help you give your money the much needed diversification by investing in just one fund. However if by short term you meant few months then Quantum Liquid Fund# should suite your time horizon. Moreover I do not know your risk appetite and existing portfolio; I am sharing a generic advice with you. Please consult your financial advisor before making any investment related decision.

    Our Sales team could always get in touch with you soon for further assistance.

  • Q2) My husband will be retiring in June 2015. He will receive Rs 50 lakh in terminal benefits-gratuity and provident fund. He will also get a monthly pension of Rs 20,000. How should he invest the lump sum amount so that his tax liability is minimum and the corpus grows.

    Great to see that you want to save your corpus and not spend it on expensive vacations or something similar! Here’s how you can invest this corpus:

    Step 1 - Calculate your monthly expenses post retirement. See if the pension (Rs. 20,000) is enough or not. If it’s enough then your asset allocation will differ. If not, invest money accordingly so that he can fulfill his needs of monthly expenses. We presume that this 20,000 is after paying taxes.

    Step 2 - Keep a portion of your money aside for contingencies in instruments like bank FDs. This could be one or two years of expenses.

    Step 3 - Other than that at this stage of your life, assuming your age is around 58 years, you may invest 10-20% in equities, 10-15% in gold and rest in debt. Generally it is presumed that at this age the risk taking capacity of an investor is low. Therefore you should park your money in less risky asset class like debt and bank FDs also.

    However, if you wish to grow your money and your risk appetite is high you can look at equities Remember asset allocation always plays an important role in the kind of returns your investments generate. Please consult your financial advisor before taking any investment related decisions.

  • Q3) I am a 28-year-old salaried employee. I am investing Rs 2,000 via monthly SIP in an equity fund. I am thinking of increasing investing more, but I am uncertain if I should invest more in equity or go for some other asset class. Please advice.

    At your age generally we see young investors have a relatively higher risk taking capacity. As you are far from your retirement age you can keep large portion of your investable amount in equity. Remember equities tend to give high returns with high risk in the long run. SIPs can help you balance out the risk factor and also make you a disciplined investor. You could always start additional SIPs and expand your monthly investments.

    It is important not to keep all your eggs in one basket. A sound asset allocation strategy ensures your portfolio is well-diversified and aggressive enough to meet your financial goals. Allocate a small percentage of your savings in debt and gold too.

  • Q4) I am a 25-year-old salaried person. I have invested Rs 5,000 for 12 months in recurring deposits. Where should I invest the sum received upon maturity? Also, I have a surplus of Rs 20,000 every month which I want to invest in RD again, is it advisable?

    Too many eggs in one basket – one of my favorite formulas I tell investors to AVOID. Looking at your investment portfolio it is evident that you are high on debt. Generally at your age (young & earning) you portfolio should be exposed to more equities. With comparatively less responsibilities and more risk bearing capacity, you could make the most with equities. However, you need to be cautious as equities have the potential to give higher returns only with higher risk. In that case you could look at SIP in any prudent diversified equity mutual fund. The surplus of Rs. 20,000 can also be divided in multiple SIP in equity funds, this way you will also balance out the risk factor and make yourself a disciplined investor.

    Moreover you can re-invest your Rs. 60,000 in a suitable instrument. Since you are a salaried person you can look at tax saving equity schemes too. Please consult your financial advisers before taking any major investment related decision.

Product Label
Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
Quantum Multi Asset Fund
(An Open-ended Fund of Funds Scheme)
• Long term capital appreciation and current income

• Investments in portfolio of schemes of Quantum Mutual Fund whose underlying investments are in equity and equity related securities of companies, debt and money market instruments and physical gold.

Investors understand that their principal will be at Moderately High Risk
Quantum Liquid Fund
(An Open- ended Liquid Scheme)
• Income over the short term

• Investments in debt / money market instruments

Investors understand that their principal will be at Moderately High Risk
* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer:

Subbu`s Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please visit - www.QuantumMF.com to read Scheme Specific Risk Factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the scheme`s objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC/ Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.