Skip to main content

Mutual Fund FMPs Fetch More returns than Bank FDs

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

 

Here is your chance as a fixed income investor to earn 10% returns after tax. Probably, it may be your last chance as experts believe that interest rates have peaked and they would start easing soon. Thanks to the tight liquidity situation in the banking system, banks and companies are raising money at a rate of 10-11%. You can cash in on the trend and pocket some handsome returns if you park your money in fixed maturity plans (FMPs), especially those with one-year tenor. There are at least four FMPs from various mutual funds like HDFC, Kotak, open for subscription at the moment. Most FMPs are open for a very short period of time and you can get information about. Fixed maturity plans with 13 months tenure make investment sense due to prevailing attractive yields and double indexation benefit available to investors

Why Invest?

For the uninitiated, fixed maturity plans are closed-ended income schemes that invest in fixed income instruments with maturity coinciding with the maturity of the scheme, thus nullifying interest rate risk. Two factors make investing in FMP an attractive opportunity now. First, attractive interest rates. One-year rates are hovering around multi-year highs, and they are expected to come down soon. Obviously, it makes sense to lock-in your money at the current rate.


We expect lower CD issuances by banks in April compared to March this year. This along with some government expenditure in April would result in money market rates moving downwards. He is not alone.

 

Government expenditure should begin in April. Also . 60,000 crore should come into the system through redemption of government securities in April. This should improve liquidity and bring down interest rates. Put simply, investors may see lower yields in April compared to what are available now. We expect interest rates to come down by 100 basis points over the next one year. Current high yields are a temporary phenomenon caused by advance tax payments and bank borrowing through CD.


The attractive post-tax return is the second reason why you should consider investing in FMPs. If fund managers can park their money at around 10.5%, and if we assume expense ratio of 50 basis points, FMPs should deliver a return around 10%. Your long term capital gain tax liability would be 20.6% with indexation or 10.3% without indexation. If you buy an FMP that matures in FY 2013-14, you are eligible to claim double indexation benefit. Your investment is spread across three financial years and you get indexation benefit for two years. That should effectively bring the repurchase price of scheme units to indexed acquisition cost of unit, making it a zero tax transaction. To ensure this, you have to remain invested in the growth plan of the FMP.

FMP Vs Fixed Deposit

Many would like to point at one-year fixed deposits of public sector banks offering 9.75-10% returns as an alternative investment option available to investors. But a point to note is that interest payable on fixed deposit is taxed at marginal rate of tax. If you are in the highest tax slab you will end up paying 30.9% tax on interest earned. But we have already seen that you may not pay anything towards tax if you are in growth option of a 13-month FMP.


But fixed deposits score over FMPs on liquidity. FMPs are listed on stock exchanges and you may never get to exit at fair value on stock exchanges due to poor liquidity. Many banks have floated special schemes that do not charge any pre-mature penalty to attract money in fixed deposits. This is especially true in 7 days to 200 days fixed deposits. So if you are really not sure whether you can remain invested throughout the tenor of an FMP, avoid investing in the same, no matter how attractive the proposition is. But if you are sure of your cash flows and want higher post-tax returns compared to fixed deposits, a 13-month FMP makes a lot of sense.

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

Submit filled up application Collection canter near you

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

LIC Leave Encashment Plan

LIC Leave Encashment Plan       Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed Call on 94 8300 8300 --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms fro

Power of Compounding in Investments

Power of Compounding in Investments Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich Top 10 Tax Saver Mutual Funds for 2017 - 2018 Best 10 ELSS Mutual Funds to Invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Tata India Tax Savings Fund  3. Birla Sun Life Tax Relief 96 4. ICICI Prudential Long Term Equity Fund 5. Invesco India Tax Plan 6. Franklin India TaxShield  7. Reliance Tax Saver (ELSS) Fund 8. BNP Paribas Long Term Equity Fund 9. Axis Tax Saver Fund 10. Sundaram Diversified Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com OR Call us on 94 8300 8300

MF SIP Top Up Online

Mutual Fund SIP Top Up Online As your monthly income grows, so should your savings. With this facility, you can increase your existing monthly SIP contributions. This can be done on a half-yearly and yearly basis. And you can top up with a minimum of Rs.500 per installment or multiples of Rs.500 as per your convenience.

Kotak Banking Exchange Traded Fund (ETF)

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Kotak Banking Exchange Traded Fund (ETF) Kotak Mahindra Mutual Fund has launched Kotak Banking Exchange Traded Fund ( ETF ). The fund aims to provide returns before expenses that closely correspond to the total returns of stocks belonging to the CNX Bank Index , subject to tracking error. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund Application Forms --------------------------------------------- Best Performing Mutual Funds Largecap
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