Did you know that the right kind of planning when you are still young, can help you lead a life of financial freedom?

You may be burdened with a number of other financial obligations, but that shouldn't deter you from charting out a financial plan for yourself and your family. Isn't it your moral responsibility to provide for their future?

Baby steps taken today may help you and your family realise your most ambitious dreams tomorrow. 

Money management expert Sanjiv Mehta discussed wealth and mutual fund-related aspects in a chat with Get Ahead readers on June 27.

For those of you who missed it, here is Part I of the transcript.

Part II: Have mutual funds become a risky investment?

Part III: The best investment options for YOU

divya asked, Dear Sanjiv, my monthly cash in hand is almost Rs 1,20,000. Out of which EMIs (HL+PL+Car Loan) is Rs 52,000. I have a housing loan of Rs 30 lakhs which I took 2 years back, car loan of Rs 2,50,000, Personal loan of Rs 4,50,000. Cash in hand is almost Rs 6 lakhs. I have started saving almost Rs 40-50,000. Please suggest how do I plan my finances. My son is 8 year and daughter is 1 year.

I have taken life time policy for my husband where I pay Rs 1 lakh every year, Smart kid policy for my son, where I pay Rs 5,000 every month. Planning to start the same for my daughter also. Where should I invest to secure my kids education, their marriage and our old age.

Sanjiv Mehta answers,  Hi Divya, this is quite a detailed question. A quick analysis of your year's cash flow shows that after an EMI of Rs 52,000, and insurance of Rs 13,000, you are left with Rs 55,000 for your monthly expenses and savings. On a loan of Rs 37 lakhs, an EMI of Rs 52,000 shows higher borrowing costs. A retiring of personal loan with existing cash in hand will allow you to save more on a monthly basis.

Your goals of education, marriage and retirement give you the appropriate time horizon. It will be imperative to save Rs 12,000-15,000 every month and invest in diversified equity funds with a mix of large cap and mid cap funds to facilitate achieving your financial goals.

roy asked, What type of mutual funds should we choose for long-term investment? Are long-term returns of open-ended mutual funds tax-free?

Sanjiv Mehta answers, Long term returns are tax-free if you have held the fund for more than a year. Otherwise it is short-term capital gain, which is taxed at 10 percent. For long-term investments, diversified equity funds prove to be good. Sectoral funds in India still have less depth, and can be very volatile.

mamu asked, Sir, what do you think should I do if I want to achieve financial freedom by the time I am 45. As of today, my age is 35.

Sanjiv Mehta answers, If at present you have sufficient passive income to sustain your desired lifestyle, and by the age of 45 have accumulated enough resources to meet your needs, it may be defined as financial freedom. A desirable lifestyle varies from person to person, and is therefore highly individualised. It is important for you to accumulate as efficiently as possible, and invest in yield-enhancing asset classes (assets that give higher returns post-tax) like stocks and real estate.

prince asked, Dear Sir , Is it wise to invest in gold from wealth creation point of view?

Sanjiv Mehta answers, Not really. If we look at its performance in the last 200 years, gold has not delivered returns comparable to stocks and real estate. The reason is that demand and supply of any commodity adjust according to the prevailing price -- a high price is not sustainable. Stocks, on the other hand, are related to economic activity and therefore are a lot more consistent.

Devaraj asked, Hi Sanjiv...I am 31 years old, pursuing PhD at IIT Madras. If I settle down with a good job next year, what should be my 15-year goal so that I can give a better future to my dependents?

Sanjiv Mehta answers, You can define and quantify your financial goals on a timeline, and then match your assets accordingly. For example, a child's education needs could be quantified with approximate timing. Then a required monthly saving could be calculated accordingly. For example, if your retirement is 30 years away, Rs 5,000 saved for 30 years at 12 per cent will provide you Rs 1.75 crores.

Harish asked, Is this the right time to invest in real estate?

Sanjiv Mehta answers, Real estate for your own usage should be differentiated from real estate for investment. Also, it needs intensive localised research, since each area will have its own pricing dynamics within an overall economic cycle. For your own usage, it is generally a good idea to buy after due diligence, even at this stage of the business cycle. Purely for investment, you have to compare the expected returns of alternative asset classes.

AJS asked, Sir, I have couple of insurance policies (endowment, money back) on which I am paying a premium of around Rs 50,000 per annum. The insurance cover is low at around Rs 10 lakhs. I am interested in having a term plan, is this fine? And what other options are available which can give good returns in long run. My age is 28 as of today.

Sanjiv Mehta answers, Term insurance is a good idea; it is inexpensive and allows you to take requisite cover. My recommendation is not to mix protection with investment -- keep them separate. Also, insurance costs in the initial years are pretty high, therefore keeping with a term plan is better.

Namit asked, Sanjiv, if I manage to spare about Rs 10K per month for savings, what's the best to invest it in?

Sanjiv Mehta answers, If you have a time horizon of 3-4 years for these savings, then stocks are the best at this juncture -- the economy is growing rapidly, and inflation even with the recent rise, is fairly well-controlled.

Mani asked, Hi, am new to mutual funds, planning to invest some amount (say Rs 25k initially). Could you tell me some of the funds that would give me good benefits in 3 years? Is it good to invest in an NFO (new fund offer)? If yes, suggest 2 or 3. To what extent will SIPs be helpful? Thanks.

Sanjiv Mehta answers, Some good funds are Franklin Bluechip, HDFC [Get Quote] Equity, Reliance [Get Quote] Growth, SBI [Get Quote] Contra, ICICI [Get Quote] Pru Dynamic, DSPML Tiger, Sundaram Midcap, and Fidelity Equity. Generally, funds with good track records are better than NFOs. SIPs are useful because they lead to disciplined savings, and you do not have to time the market.

Part II: Have mutual funds become a risky investment?

Part III: The best investment options for YOU

Dr Sanjiv Mehta is the managing director of Finance Doctor (www.financedoctor.biz), and author of the recently published book, 'Winning The Wealth Game: Cricket Strategies For Financial Freedom'.