POSTED BY January 19, 2014 7:01 pm COMMENTS (5)
ONDear Manish, Ashal and all senior boarders,
Best wishes for new year.
I will be getting Rs. 3 lacs from maturing RD. I wish you utilize that money for home improvements in next 1 to 3 years (sorry .. exact time frame is not fixed). Need your inputs regarding where should I park this money.
I am in 30% tax bracket hence not really interested in FD. Any other way of investing this money in safe instrument where I get comparable income as of FD but safe as well?
Thanks,
Kulkarni
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Dear Kulkarni, please park your money into HDFC High Interest Shot Term plan Growth option.
Thanks
Ashal
I am in two minds if there can be a ‘proper/suitable’ recommendation/suggestion based on brief online interaction … with that out of the way, here goes.
Among liquid you may consider:
– Templeton India Treasury Management OR
– HDFC Liquid Fund OR
– ICICI Prudential Liquid.
Amount Short term funds, you may consider:
– Birla Sun Life Short Term Opportunities OR
– Templeton India Low Duration OR
– HDFC Short Term Opportunities.
You may have to do some study/research to find out suitability … e.g. some of the funds here are rated as ‘A1+’ by ICRA.
In case you need specifics, you may get in touch with me from my blog …. planrupee . com
Thank you AJ PlanRupee for quick reply.
If you could give me some suggestions of which Short Term fund and liquid fund to choose, it would be great.
Thanks.
@Kulkarni
Since you are in 30% tax bracket and also since your funds usage is between 1-3 years, you would do best to invest this money in ‘Debt / Fixed Income’ Mutual Funds.
Being non-Equity oriented funds, these funds can be equally safe (like FD) if the right funds with right credit profile are chosen that match with your maturity (redemption) time period.
– 70% amount in short-term funds (maturity of near 1 year).
– 30% amount in liquid funds,
this combination would serve you well.
As soon as you complete 1 year, you can claim indexation on these funds for tax purpose, it will reduce your tax liability to a great extent.
For example: last year, FY 2012-13, the index was declared @ 10.25%, meaning, your gains upto 10.25% for that year would be Tax Free.
So, if for this year the index is declared even at 9%, then your gains upto 9% would be tax free (after indexation). This return sure beats post-tax return of any respectable FD by a mile.
You could invest that amount in debt instruments like Liquid Funds or Debt funds. They have given returns of around 8-9%. They happen to be tax effective compared to FDs because if you happen to remain invested for more than a year, you also get indexation benefit.