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Mutual Funds - Investing in liquid funds

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Investing in the growth option of liquid funds for more than a year is a more tax-efficient and high return proposition...

 

Liquid funds or short-term funds invest in short-term debt instruments with maturities of less than 91 days. The choice of dividend payout or growth depends on your investment horizon and your financial needs. If you want to invest for less than a year and need some money at regular intervals you can choose the dividend payout option. The AMC will deduct 25 per cent Dividend Distribution Tax (DDT) on dividend paid out. Also, gains from redemptions made in less than 12 months will be added to your income and taxed according your tax slab. So besides the DDT, you will be paying tax on gains at 10, 20 or 30 per cent, the tax slab applicable to you.

 

If you wish to stay invested for more than a year consider choosing the growth option as you will save on the DDT. Also, the gains will be subjected to long-term capital gains tax at 10 per cent without indexation and 20 per cent with indexation.

 

Investing in the growth option for more than a year would be more tax-efficient and high return proposition.

 

Liquid funds invest in money market instruments, short-term corporate deposits and bonds with maturity between three and six months. These funds provide good liquidity, low interest rate risk and the prevailing yield in the market. For these reasons, liquid funds are also used as an alternative to short-term fix deposits.

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

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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

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

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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