8 replies on this article “Liquid fund”

1. Jeetu Ojha says:

   April 28, 2013 at 8:23 pm

   Dear Ashal and Pattabiraman

   Thanks for the valuable reply .. 🙂

   Thanks & Best Regards
   Jeetu Ojha

   Reply
2. Ashal Jauhari says:

   April 28, 2013 at 7:54 pm

   Dear Jeetu, Please read my reply in addition to what dear Pattu has already told you. Instead of checking so many funds, you should invest in the liquid fund of your existing Eq. fund.

   Thanks

   Ashal

   Reply
3. Jeetu Ojha says:

   April 28, 2013 at 7:13 pm

   Hi Pattabiraman

   1) If i go for RD or FD they have locking period and if i need money ( eg for 2 yrs ) i cant break RD or FD( if i do 1% penalty) http://www.ninemilliondollars.com/2012/09/pay-penalty-on-premature-withdrawal-of-fixed-deposits/

   In that case i have done calculation that HDFC Short Term Opportunities ( as u mentioned earlier ) is performing good in terms of Returns , Maturity , Rating AAA & Expense ratio .30.

   If i go for Short Term Opportunities fund i have 2 option 1) i can carry for 5 yrs 2) if i need money i can withdraw money ( closing my fund ) ( Exit Load 0.5% for redemption between 1 – 90 days)

   So can i go for Short Term Opportunities fund?

   Thanks & Best Regards
   Jeetu Ojha

   Reply
   1. Free Financial Calculators says:

      April 28, 2013 at 8:16 pm

      You can do what Ashal says or open RDs for 1 year. After one year start a new RD and invest the old RD proceeds in a FD for 1 yr or 6 months or use it as per requirement.

      Reply
4. Jeetu Ojha says:

   April 28, 2013 at 6:46 pm

   Hi Pattabiraman Ji

   Thank you Pattabiraman Ji 🙂 I got it 🙂

   Thanks & Best Regards
   Jeetu Ojha

   Reply
5. Jeetu Ojha says:

   April 28, 2013 at 6:21 pm

   Thanks Pattabiraman for Prompt reply and i’m in 10% Tax slab..

   1) If i invest like wise i said invest 500rs through SIP every month for a period of 5 yrs then how much return i can get ? i used your debt fund vs FD calculator ( Its Comparison between a lumpsum investment in a Fixed deposit & a debt mutual fund its proven that 10%
   Tax Slab F.D returns are good compare too Debt mutual Fund.

   2) But in my case i want to invest in SIP ? can i opt short term Fund? ( I’m in 10% Tax Slab)

   3) I Checked Average Maturity for above mentioned 5 funds ( which i was posted ) and their ratio ranging from 0.06 yrs to .16 yrs which are much lesser then compare to Short term Fund.

   4) I will check out 5 short term funds & income funds and get back to you. 🙂

   Thanks & Best Regards
   Jeetu Ojha

   Reply
   1. Free Financial Calculators says:

      April 28, 2013 at 6:40 pm

      1) If you want to invest via SIP use a RD. Guaranteed returns with zero risk offers peace of mind. For someone in10% this is better than debt funds

      2) learning about debt funds is a good idea in general. Different debt funds have different maturity periods. There are two ways to invest:

      a) match your investment duration with maturity period (income funds for a duration like you mentioned)

      b) choose a fund with much lower maturity duration than investment duration (1 yr duration for a 5 year goal). This keeps risk low. Returns will also be low but I don’t care simply because:

      for goals less than 5 yrs I dont care about power of compounding. Decent returns with minimum tax out go is crucial

      For someone like you in 10% slab, best is RD and FD.

      Invest your time in learning about handling your long term goals. that is more important.

      Reply
6. Free Financial Calculators says:

   April 28, 2013 at 3:29 pm

   Jeetu, Thank you. What I write is primarily for equity funds. Additional selection factors are necessary for debt fund selection.

   3) indexation benefits refer to the way in which debt funds are taxed either at a flat rate of 10% or 20% taking into account the cost inflation index

   See my debt fund vs FD calculator. I will post a lump sum comparator next week. That will give a better picture on taxation

   2) 28% refers to net dividend distribution tax and not for growth option

   1) for a 3-5 year option a liquid fund is not a bad idea. Risk-wise is it near zero.
   Since the duration is on the higher side you can opt for a fund which has higher maturity period. A short term fund will do
   You need to look at the maturity period and quality of holdings in addition to what I wrote.

   For example see
   HDFC Short Term Opportunities
   http://www.valueresearchonline.com/funds/portfoliovr.asp?schemecode=11308

   As on 31/03/13 Average Maturity 1.48 yrs.
   Nearly 60% of holdings in instruments with AAA credit.
   Not saying you should invest here but to check these as well for your funds.

   Debt income funds with a maturity of about 2 years should also work.

   Another category to consider is dynamic bond fund. This is similar to a multicap equity fund which has all kinds of debt components with different maturities.

   Dont confuse yourself too much. Suggest you go with short term or income funds,
   For such short durations no need to break our head over returns,
   Anything between 7-9% should do,

   HOWEVER if you are in the 10% slab A RD OR FD WILL DO wrt tax!

   Reply

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