Skip to main content

Invest in Equity MF Via Debt Fund

 

In India, most first-time investors in mutual funds are introduced to the sector through the equity fund route, which is relatively risky compared to debt funds. However, logically these investors should first invest in debt funds, that too in liquid funds which give slightly better returns than savings bank rates.

After they get a taste of liquid funds and understand the advantages and disadvantages of these schemes, the next step should be to invest in short-term funds, fund house officials and financial planners say. Then they should invest in income funds, followed by balanced funds, a mix of debt and equity. Only when they understand the working of debt funds and, to some extent, that of equity funds, investors should put their money in diversified equity funds and other equity schemes. And even when they know about equity funds, part of their corpus should be in debt funds, financial advisers said.

The thumb rule is that the percentage equal to your age should be invested in debt instruments. So if your age is 30 years, 30% of your corpus should be in debt instruments, including debt funds.

Investors who are used to investing in bank FDs and RDs can also look at debt funds because of some of the inherent advantages, like better returns and tax efficiency, nearly the same level of liquidity and also diversification.

Here are the types of debt funds available to investors. The accompanying table gives investment horizons and investment suitability:

Liquid Funds:

Also called money market funds, they invest in treasury bills, call money, banks' certificates of deposit, commercial papers, etc, which are short-term instruments.

Ultra Short-Term Funds:

These schemes invest in debt instruments which have maturities of about a year and, hence, offer return that is slightly higher than liquid funds.

Short Term Funds:

These funds also invest in instruments with about one year maturity and are less volatile in nature than long term funds.

Income Funds:

Also called long term funds, they usually invest in debt instruments with maturity of more than a year. Some funds, however, also invest in short-term instruments to lower volatility in their portfolio. In these funds while the chance of volatility is higher, there are higher chances of capital appreciation in times of falling interest rates. Long-term investors who have the capacity to take higher risks can consider investing in these funds.

Gilt Funds:

As the name suggests, these funds invest only in government securities. They have higher interest rate risks.

Dynamic Bond Funds:

These are debt funds which are actively managed, and have corpus invested in debt instruments across maturities.

Monthly Income Plan:

These schemes aim to distribute part of their monthly gains, if any, to investors. A major part of the corpus of these funds is invested in debt instruments while some part is in stocks.

Fixed Maturity Plans:

These schemes, closed-ended in nature, offer returns which are almost assured at the time of investment.

Although debt funds are relatively safer investments than equity funds, financial planners and advisers say that before investing in these funds, you should look at tax implications for your investments and also compatibility with your risk-taking ability. Also, there are two related issues to keep in mind: Price risk and reinvestment risks. Price risk is in case there is a downgrade or a rise in the rate of interest in the economy, the price of the debt instrument will fall, leading to a loss in the portfolio. Re-investment risk is the risk of getting a lower rate of interest when the current investments mature and you need to re-invest them.


 
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 from all AMCs

Popular posts from this blog

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 2015. 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]
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