FMP as an investment option: Need guidance

POSTED BY Narasimha Gupta ON August 20, 2013 11:48 am COMMENTS (5)

Happened to read recently on FMP as investment option. I know that the liquidity is an issue with it, but is there a gaurenteed returns received from FMP, for a fixed tenure of 3 to 5 years. How dependable is that? Who are good players in market to go for. Need your guidance, please

5 replies on this article “FMP as an investment option: Need guidance”

  1. Arpit Goyal says:

    Hello Narasimha,
    Well Nifty BeES is a good option. Depends on your time frame for which you wish to remain invested.
    Eg. Nifty at 5000 will certainly reach 6000 levels again someday. Your return are restricted at 20 percent.
    At the same time if you invest the same amount in a good performing & fundamentally strong stock then your returns would be remarkable.
    Yes Bank purchase at Rs. 295 & reaches Rs. 425 then returns would be almost 44 Percent.
    Now the choice is yours but I believe that Nifty BeES restricts your earnings as well as losses. 🙂 Why not make a buying in the Nifty 50 Listed Stocks . Eg SBI,L&T,HDFC,TISCO etc.
    As a retail investor its always better to invest in direct equities or Mutual Funds or Gold ETF.
    Some of the good MF with 3-5 years horizon: SBI Emerging Business Fund,HDFC Equity Fund,ICICI Dynamic Fund Growth Option.
    I would be able to help you better if You could tell me your requirements & your time horizon.

  2. Arpit Goyal says:

    Hello Narasimha Gupta,
    FMP as an investment option is the most talked about topic these days on every News Channel. I would like to bring to your notice that if you are a retail investor with a horizon of 3-5 Years then FMP Would be of no good. but yes if you are looking for less then one year safe option then FMP will be fine. ( Definitely in one year period you would get ample of opportunities a to invest in Good Stocks/MF at a very discounted price)
    Risks are definitely involved with FMP too hence cannot compare that with FD Returns.
    Moreover markets are too volatile right now & in my opinion this is the best time for making investments gradually ( either MF or direct Stock Equity) with 3-5 Years period.

    1. Narasimha Gupta says:

      Thanks Arpit. It does makes sense to me that it is good to look for MFs / stock now, as the market is going down. What are your thoughts on, investing some portion in Nifty 50 BeEes?

  3. Dear Narasimha, there is no guarantee of return in FMPs. Every FMPs should be checked on it’s own merit. There is no such thing as good player. Default on your FMP can happen with the most reputed AMC also.



    1. Narasimha Gupta says:

      Thanks for your guidance, Ashal.

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