How to park money coming from FD maturity for next 1-2 yrs ?

POSTED BY Kulkarni P ON January 19, 2014 7:01 pm COMMENTS (5)

Dear 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

 

5 replies on this article “How to park money coming from FD maturity for next 1-2 yrs ?”

  1. ashalanshu says:

    Dear Kulkarni, please park your money into HDFC High Interest Shot Term plan Growth option.

    Thanks

    Ashal

  2. AJ PlanRupee says:

    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

  3. Kulkarni P says:

    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.

  4. AJ PlanRupee says:

    @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.

  5. mkamlesh says:

    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.

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