Skip to main content

Book profits from investments and move them to debt

Some strategies to book profits in equity and invest them in debt instruments


   Stock markets are consolidating at all-time high levels and analysts believe a break-out from current range can be expected next month. The market movement henceforth will largely depend on global developments. Investors are advised to review their portfolio and do some fine-tuning in terms of profit booking, part-profit booking, cut loss, shifting equity positions or re-balancing from equity to debt instruments.

   Domestic economic growth is healthy and the long term markets outlook remains positive. Foreign institutional investors (FIIs) are also positive on emerging markets in general. However, the markets are already trading at quite high levels and investment in equities is high risk due to global uncertainties. Following the monetary policy tightening from RBI, interest rates have gone up and debt-based investment instruments is quite attractive for capital preservation, low investment risk, good interest returns and capital appreciation if interest rates go down in future. Investors with low risk profile can reduce exposure in equities and re-balance by investing in debt-based instruments and commodities. Here are some options to diversify your investment portfolio:

Bank deposit    

The basic feature of bank deposits is safety of principal amount, easy liquidation of deposits and accumulation of regular interest. Interest rates on bank fixed deposits are on a rise after the RBI's decision to tighten the monetary policy. People should look for bank deposits for their short-term investment requirements.

Debt fund    

These instruments are very good options for risk averse investors. These funds invest in debt-based funds and government bonds and therefore provide principal protection with decent return. These funds come without any lock-in period, provide quick liquidation and are handy for people looking to invest with short- to medium-term perspective without any risk.

Liquid fund    

Liquid funds are good for investors to park their funds for the short term. Liquid funds invest the corpus mainly in money market instruments, short-term corporate deposits and treasury. Liquid funds are quite useful in terms of funds withdrawal and usually liquidate the funds on very short notice.

   Returns from bank fixed deposits are taxable depending on the tax bracket of the investor, which considerably pulls down the actual returns, whereas, dividends from liquid funds are tax free in the hands of investor.

Gold and silver    

The investment outlook of the overall commodities looks quite good due to uncertainty at global level. However, small investors should concentrate their commodities exposure to precious metals like gold and silver. Both of them have given very good returns in the recent past and their outlook for short- to medium-term is quite good.


   You can invest in gold or silver through ETF or purchase of physical gold/silver coins from reliable shops and outlets. Exchange-traded funds (ETFs) are much like mutual funds with gold/silver as the underlying asset. Various well-known mutual fund houses manage gold and silver-based funds. The units of these funds are very easily tradable in the market, making it quite easy to invest, track and liquidate the investments.

 

Popular posts from this blog

Rs 14,000 Crore worth of tax free bonds coming soon from NHAI , PFC

  NHAI, PFC file prospectuses, coupon rate not yet decided MORE debt investment options have opened up for investors with AAA rated tax-free bonds worth over Rs 14,000 crore lined up. The National Highway Authority of India ( NHAI ) and Power Finance Corporation ( PFC ) are offering Rs 10,000 crore and Rs 4,033.13 crore worth of tax-free bonds, respectively, as per prospectuses filed with the Securities and Exchange Board of India (Sebi). Of a Rs 5,000 crore issue by PFC, Rs 966.87 crore has already been raised through private placement on September 28 and November 1. Tax-free bonds give investors tax-free return on any amount invested. In another kind of bonds, the long-term infrastructure bonds, investments up to Rs 20,000 are tax exempt, that is this cap amount can be deducted from the taxable income. Accordingly, the NHAI prospectus has clarified that only the amount of interest from -and not the actual investment on -its new bonds will be tax-free. "NHAI's publ...

Change in Fund Manager for some of HSBC Mutual Fund Schemes

Buy Gold Mutual Funds Invest Mutual Funds Online Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) However, this facility is only available to Unit holders who have been assigned a folio number by the AMC.   HSBC Mutual Fund has announced that the below mentioned schemes shall be managed by the new fund managers as stated in the table. The effective date will be July 02, 2012.   Amaresh Mishra 's will be Vice President and Assistant Fund Manager. Having done a Post graduate diploma in Business Management and Bachelor of Chemical Engineering, he has over seven years of experience in Equities and Sales.   Mr. Piyush Harlalka's designation shall be Vice President- Fixed Income. Qualified as a C.A., C.S. and holding M.B.A.( Finance degree), he has over six years of experience in Fund management and ...

How EEE and EET Tax affect Retirement Investments

  An important factor while choosing a financial product is its taxation , and for retirement savings, this is even more important as the sums involved are usually life-long savings. Here's a look at the current tax treatment of three major long-term retirement planning products, which are - Employees' Provident Fund (EPF), Public Provident Fund (PPF) and National Pension System (NPS). EPF The tax treatment is EEE, which means your money is exempt from taxes at the time of investment, accumulation and withdrawal. At the time of investment, the tax deduction is under the limit of section 80C of the Income-tax Act , which is currently Rs 1.5 lakh. Partial withdrawals are also tax-free if made after 5 years of continuous service. If withdrawals are made before 5 years of service, 10% tax will be deducted at source. Exceptions have also been provided for transfer of amount and conditions wherein the subscriber is unemployed for more than 2 months or the loss of job was beyond th...

Personal Finance: You can insure your wedding

But luck may not always be on your side. With the frequency of such attacks, as also other risks and unforeseen accidents growing, a wedding insurance is something you may want to look at if a marriage is being planned in the family. Event insurance plans like this is still in its nascent stages due to low awareness. And given the sacred nature of the ritual, nobody wants to discuss or think negative. But as wedding spends and risks grow, it makes sense to cover the potential monetary loss. The policy in those countries even covers the loss of the wedding ring, the wedding gown not reaching on time and even the expenses/loss due to late or non-appearance of the photographer which may mean staging the event once again for the photograph. In India, most insurance companies — including ICICI Lombard General Insurance, Oriental Insurance, Bajaj Allianz and National Insurance — offer wedding insurance. The policy is tailor made to individual requirements and needs. The sum insur...

DSP BlackRock MidCap Fund

Best SIP Funds Online   HOW HAS DSP BlackRock Small & Mid Cap Fund PERFORMED? With a 10-year return of 14.61%, the fund has outperformed both the category average (12.34%) and the benchmark (10%) by a good margin. Should you invest in DSP BlackRock Small & Mid Cap Fund? This fund invests predominantly in mid-cap stocks but takes a sizeable exposure in small-caps as well. The focus is on nascent companies with high growth potential. The fund manager places emphasis on quality and avoids inferior businesses even if these look tempting from a valuation perspective. Over the past year, the fund portfolio has grown, having added to some of the underperforming sectors like chemicals and healthcare. Its portfolio churn has come down significantly. The heavily diversified portfolio is run completely agnostic of its benchmark index— most bets are from outside the index—which can at times lead to bouts of underperformance as seen in the recent years....
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now