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POSTED BY ON December 10, 2010 3:01 pm COMMENTS (2)
Do Fixed Maturity Plans offer better returns than FDs, are there any good FMP to invest in .also whanted to exactly what are FMP’s
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When considering a tax bracket of 30%, the FMP performs better than the Bank Fix deposit, simply because the Mutual fund company pays the tax at the rate of 14.5% instead of you paying it at 30%. In this case, the interest received by you, post dividend declaration tax is tax-free.
The following link will help you more.
http://www.investmentkit.com/articles/2010/11/fixed-maturity-plans-fmps-or-fixed-deposit-fd/
FMPs are pure debt products in which fund managers invest in CDs, CPs and other debt securities and hold it till maturity.
Whether it is better than FDs depends on the category of Investors and the returns/liquidity expected. These Instruments give better tax efficient returns as compared to FDs for people in 20%-30% tax bracket.
Since short term liquidity crunch is there in market so now a days you can find many FMPs out there…recently some FMps of reliance, ICICi, Birla and sundaram has been announced.