Dear Ashal,
I am trying to collate the +/- for FMP and Debt funds and their benefits over each other… as per my research, in most cases I see that the Debt funds come out as clear winner except for the situation if interest-rates change a bit on the upward side, this situation will favour FMPs. Can you pls ratify my understanding?
Also, can you give some reasons why debt fund should not be the long term (5-8 years) investments?
One more thing, that both FMP and Debt fund would be eligible for indexation, but not the bank FDs as per Feb 2013 budget. Is that an accurate statement?
Thanks so much for your time and for everything that you do for society!
[A]
Dear ZZyzx, bank FDs were never subject to indexation. So nothing has changed for bank FDs in Feb 2013 budget or earlier. So in that sense, your statement is not accurate. Interest income was always taxable at slab rate & at least in near future ‘ll remain so.
what sort of help you want to educate yourself. The biggest help if someone can offer to you is, yourself. Please devote own time & read the past discussions here in the forum & you ‘ll get a lot of info & education automatically. In between, you may ask any question in the forum & all of us ‘ll try to help you.
Thanks
Ashal
Hi Ashal ji,
Can you also help in educating me on this?
Both FMP and Debt funds would be eligible for indexation advantage when it comes to taxes, but not the bank FDs as per Feb budget. Is that an accurate statement?
OBTW this is not my “fake” name, just an alias I work with for my online footprint 🙂
Thanks so much for your help again!
Thanks Ashal ji for replying and helping me in in further validation. Very much appreciated.
Dear Zzyzx, FMPs in a sense are substitute of bank FDs for high networth people due to tax arbitrage. Yes Debt funds are better one for common public like me & you. The research is fine. Your understanding is also fine. Just a small correction, in case of interest rates going up, FMPs ‘ll be locked up in lower rates but the debt fund & particularly dynamic types, ‘ll readjust the portfolio to overcome this negativity of interest rate rising & thus ‘ll try to improve your profits/gains.
Long Term investing in Debt funds can be done. Actually aparrt from PF & PPF, if one still do have some space for debt, instead of Bank FDs orFMPs, long term debt funds should be the choice for 10-156-25-35 years. Please check the below link from dear FFC.
http://freefincal.wordpress.com/fd-vs-debt-fund-returns-comparator/
By the way, what stopped you from registering your original name on the forum as you are using a fake name?
Thanks
Ashal