Can i avail double indextation benefit from liquid funds ??

POSTED BY Dinesh Saboo ON August 31, 2012 2:19 pm COMMENTS (12)

Dear Sir ,

i am currently having a investment in BSL Floating Rate short term – Growth and HDFC Liquid for my family , as a save alternative for parking saving money . I wan to know whether i can avail bouble indexation benefit for my parked my in these funds for more than two financial year.

Can i avail multiple indextaion benefit if i keep the money for many years ?

What are the benefits of FMP over liquid fund , if any ??

12 replies on this article “Can i avail double indextation benefit from liquid funds ??”

  1. Dinesh Saboo says:

    Dear Ashal ,

    there is no calculation , i have seen that this amount of money always stays in savings account , partly to fund emergency purpose , partly to fund IPO ,partly to buy share when needed, partly to give loan to relatives etc etc , my father needs high liquidity as he feels much secure . He does not have any credit card or other alternate source to generate cash when needed .It is as simple as this , thus liquid fund .

    regards
    dinesh saboo

    1. Dear Dinesh, in the light of all the info provide by you, please continue with your funds. If given a choice, I w’d like to invest in Eq. MFs from these liquid funds through STP instead of SIP from the bank accounts from all of you.

      Thanks

      Ashal

      1. Dinesh Saboo says:

        Thanks Ashal ,

        one more question , i want to move fund from bank fd to FMP , how do i see tentaive return from FMP , there rating , there risk .

        regards
        dinesh

        1. Dear Dinesh, the practice of indicating return from FMPs had been banned by SEBI a long back. My personal choice ‘ll be to keep money in the name of mother if she is in non-earner category.

          Thanks

          Ashal

          1. Dinesh Saboo says:

            thank you

          2. Dinesh Saboo says:

            Dear Ashal ,

            what is the best way to transfer money to non earning member of family, make fd or other investment in his/her name and get back the money with interest .

            regards
            dinesh

          3. Dear Dinesh, you & your brother can gift the amount to your mother but your father can’t gift. He may gift to his sons & later on sons may gift to mother.

            Thanks

            Ashal

  2. Dear Dinesh, the objective of parking money in a liquid fund or short term fund is to park for 3-6 months period or at best 9 months. Why do you want to park for 24-36 months? Can you do tell me the benefits if any?
    the answer for your basic query is Yes, if your holding period is intervening in to 3 different FYs, you ‘ll get the benefit of double indexation.

    Thanks

    Ashal

    1. Dinesh Saboo says:

      Dear Ashal ,

      objective is simple to have liquid cash available within two days. Moreover the interest earned is almost same as FMP . double indextaion will help in saving tax . This is for few lakhs rupees always present in savings acoount of my family.

      If you have better suggestion kindly help.

      Regards

      Dinesh Saboo

      1. Dear Dinesh, keeping emergency funds in liquid funds is OK. May I know how do you reach this few lakh figure as your benchmark for emergency funding? In simple words, how much money you are holding as emergency funding & what was the calculation to reach that figure as your target?

        Thanks

        Ashal

        1. Dinesh Saboo says:

          Dear Ashal ,

          I have 4 accounts

          1. Father account – approx 2.5 lac in that account , moreover 40k adds per month .
          2 Mother account – approx 1.5 lac
          3. My account – approx 2 lac + 50 k added per month
          4. Brother account – approx 1 lac .

          all figures are approximate , i need to park all money in liquid to have good return + double indextation.

          regards

          dinesh saboo

          1. Dear Dinesh, how much money is there – answered but what is the basis of calculation that X amount should be my emergency fund?

            Please clarify.

            Thanks

            Ashal

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