Best Consumer Stocks For 2015
Below is the verbatim transcript of Roongta's interview with CNBC-TV18.
Q: Is it a good idea to voluntarily increase employees' provident fund (EPF) allocation, but on the flipside would is it advisable to opt out of contributing EPF?
A: Very few people are aware that one can opt out of an EPF when one is joining at a new job and is not covered in the definition of an employee.
The key is should one opt out. I do not think one should opt out because what employer's contribute, up to 12 percent of basic salary is exempt from tax and that earns 8.5 percent and is completely tax free and it also requires a matching contribution from employee side, which is again deductible for tax purposes plus the interest earned on that is exempt, there is a compulsory saving, a retirement corpus gets built. Therefore, EPF is a great thing which even if one has the option to opt out of; one should not opt out of.
Caller Q: My goal is wealth creation and I can invest Rs 6,000 a month. How can I allocate this money?
A: It seems this is extra money and there is no serious liquidity requirement on this and it is something that you can do long-term and if that is true then bigger allocation to equity even as much as 90 percent is something that can be recommended. You can put it through a systematic investment plan in a largecap fund. Therefore, you are put Rs 5,000-5,500 in a largecap fund or you can put Rs 5,000 in provident fund or gold fund. The choice is yours.
However, the key to this is discipline. Continuously keep on doing this month after month, do not look at what is happening to the net asset value (NAV). Over a long period of ten years it should give you excellent returns. Assuming returns of 14 percent, Rs 6,000 a month can become as high as Rs 15 lakh to Rs 16 lakh.
Funds that I can recommend on the largecap side could be Franklin India Bluechip Fund , HDFC Equity Fund or any other largecap fund possibly even an index fund, if that is what you like.
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