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POSTED BY ON February 5, 2013 5:19 pm COMMENTS (9)
Dear All,
I wanted to know the best possible way to invest or save & invest for one of my SHORT TERM Goal.
I will require 5 lacs in a period of 4-5 years.
I surely can’t go with Equity related products as the timeframe is very near.
I have considered the following options.
1. Bank Recurring Deposits – Good as per current Interest rates, but after Tax adjusted it is not a good option (not sure of the current interest rate to previal for all my 4-5 years tenure)
2. Fixed Deposit for 5 Years – I have to invest in lumpsum now to get at lumpsum after 5 years
3. Balanced Funds – This is one of my option to go with – What you guys say???
4. Keep in my SBI (Auto Sweep) Account – With Interest rate at 8.5 this can be an option but again it attracts Tax.
Any other ideas so that i give out less tax and get some good amount of interest on the way i accumulate money for my goal.
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Dear Ashal,
Thanks for that thought process….
Infact yes, i have gone through the sructure of MIP’s (theritically) and they seem interesting… given the rate cycle decline (assuming)…. MIP’s are poised for growth.
I have few queries on these thoug,
1. If they pay out Dividends -> the NAV is adjusted as per the amount paid and in case if these dividends are regular NAV might not go up as expected in 4-5 years (am i correct or missing something).
Our only return would be of the Dividends????
2. If point 1 is True, we should be taking care of our dividends so as to get to our goal, since this is the money we got as a return.
3. Lately, how are the MIP’s and Debt Funds as Ramesh suggested searched in Funds India (keywords)….. I tried various but i get some junk data.
Thanks in Anticipation.
please read Point 3 as below
3. Lately, how are the MIP’s and Debt Funds as Ramesh suggested searched in Value Research Online (keywords)….. I tried various but i get some junk data.
Dear Sunil, @ 8% post tax return, you need to invest 8800 Rs. for 4Y term & 6800 Rs. for 5Y term. For my personal money I may opt MIPs with a tint of Eq. of not more than 20-25%. It’s my personal call for myself & you are free to opt your own call.
Thanks
Ashal
Thanks Ramesh,
I have just studied about Indexation.
I am really confused on how do we calculate the tax to be paid (20%) with all these Indexation figures….
Do we have any calculators to put in values and get the amount of tax to be paid.
Also the value changes every year (Inflation Index), how do we get the values.
How much does we save if we pay 20% with Indexation to paying 10% flat??? is it that substantial???
The tax will be lesser of the two. So 10% flat is upper limit.
For indexation, read this up- http://www.thewealthwisher.com/2010/09/07/what-is-cost-inflation-index-and-indexation/
Thats a wonderful article on Indexation, Thanks a lot Ramesh.
I am almost clear on the Indexation part.
Thanks Ramesh for your quick answer.
Does the returns of these Debt Funds attract Tax???
Yes, Balanced funds also invest in Equity but they limit the maximum amount to invest in Equity – However, it might not be a good option to go into Equity for such a sshort period.
They do. But quite favorably as compared to FDs.
http://localhost/jagoforum2/short-and-medium-term-investment-options-for-30-tax-band/6498/#comment-21698
Some open end Debt funds like Franklin Income Opportunities, Income Builder or Birla Dynamic fund. All growth options.
Btw, balanced funds also invest in equity.