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POSTED BY ON December 27, 2012 7:51 pm COMMENTS (3)
Hello,
I have some cash in saving account. Already I have Term plan (75L-Aegon), 11k/month SIP, NSC. Currently seeing only FD option @ 8.75% as I dont know when it will be required e.g. buying vehicle or furnishing house… (Since my demat is linked with saving, cannot convert/open flex term deposit (sweep in/out)).
Unable to take decision. Appreciate, if you could advise/provide some tips.
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A liquid fund is the safest mutual fund although the risk in not zero. First park most the money in shot term FDs few weeks depending on your need and then put some in a liquid fund (any fund should do, online investing and ease of redemption is important)
once you become comfortable with liquid fund then you can put more in it,.
If you choose FD for a couple of weeks or so you can also do a FD ladder:
split the total amt in 5 parts (less than 1 lac) then open a FD for 1 week, another for 2 weeks another 3 weeks and …
When one matures reinvest again for 2 weeks. This way you will have a FD maturing each week . This will give immediate liquidity.
Of course this is a pain. even if online FD option is there, then you need to take care of TDS and taxation. This is of course an issue even with a single FD.
If the ladder option is cumbersome then you open short term FD together (each less than 1 lac)
Thanks for prompt reply!
Amount is in some lacs. would it be ok to invest all in liquid MF? If not, May be some % in liquid mf (e.g. 20-30% assumption), what about rest of the part?
If liquidity is the issue then invest in a liquid mutual fund. You can get it out anytime and is likely to give more then 4% (SB) returns.
For short term goal compounding effect will be low so rate of returns are not so important.
If you are to able to prioritize your goals in terms of when you need it, how much need for each you could plan even better