Lumpsum investment in MFs – STP/Flex STP

POSTED BY KRG ON October 23, 2010 8:22 pm COMMENTS (3)

Hi,

Two of relatives would like to invest some lumpsum amount (1 lac each) in MFs but do not have PAN card. When I queried with an agent, we cannot go for SIP from their banks branches as they are in rural area.

My questions are:

  1. Which type of investment is good in this case? STP or Flex STP (Like HDFC Flex STP which is based on NAV)
  2. For 1 lac amount, how long they should opt for STP?
  3. Can I invest on their behalf and put them as Nominee or is there any better way? Will it interfere with my existing folio nominations?

Thanks

3 replies on this article “Lumpsum investment in MFs – STP/Flex STP”

  1. jitendra solanki says:
    October 24, 2010 at 12:36 pm

    KRG

    Pan Card is mandatory for any amount of investments.Thus first apply for their PAN card.

    In case you invest on their behalf the money belongs to you and thus you will be liable for any deduction or tax.

    Reply
  2. Manish Chauhan says:
    October 24, 2010 at 10:31 am

    KRG

    1) You cant judge like this based on situation , what do you mean by “based on NAV” , mutual funds are always based on NAV . I would suggest not invest right now in markets and invest the money in pure debt funds and after 1 yr from now , start deploying your money through SIP .

    assumption is that markets will be at lower point after 1 yr .

    2) STP of 6 months looks good to me .

    3) You can , but it is not the same as they have invested . You can always invest in your name and make them nominee , but that does not solve anything , the money will become yours in that case (legally) and they might not be able to claim it after your death unless you have a will saying that, because nominee is just a caretaker of the money , it actually goes to legal heirs

    Manish

    Reply
    1. KRG says:
      October 24, 2010 at 10:46 am

      Thanks Manish, Reg. Flex STP, as per my understanding, the STP amount will vary based on the NAV on a particular day. If it is low, more amount will be used for purchase.

      http://www.hdfcfund.com/InvestPlans/ContentDisplay.aspx?ReportID=03B44AF6-AFE7-4F58-A220-6D81DCE80B2C

      Reply

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