PPF vs Mutual Funds

POSTED BY Mohana Ganesh ON March 27, 2013 11:08 am COMMENTS (6)

Dear Manish :

I came to know through one of my friends re Jagoinvestor.com and I have started reading some blog or the other every day since the past 10 days. All of them are very informative. I downloaded the Ebook too.and found it very informative.

Today, I was reading blog on PPF. My PPF matured about 3 years back and I invested the money in HDFC Platinum Deposits for 15 months (twice) where the rate of interest was 10%. I thought this is better than continuing for another 5 years with PPF as the rate of return is better even after TDS deduction on maturity.

I am planning to invest on maturity this time a lakh each in different mutual funds where the return is anything around 12-15% for the long term. Here also it is not taxable and hence the return will be good.
Planning to inveswt in SBI Emerging Bussiness Fund, SBI FMCG Fund, BSL Equity Diversified, Canara Robeco equity Diversified, Quantum Long Term Equity, HDFC Top 200, UTI Dividend Yield. Most of my fund selection is based on Moneylife Magazine recommendations.

I would like your frank opinion on my decision, as you are a financial expert.

Regards,

Anonymous

6 replies on this article “PPF vs Mutual Funds”

  1. Dear Mohana, please do not invest your money at all & first invest your time to read & understand a lot of things. the direct answer is already given by dear FFC, for your query, hence not repeating the same.

    thanks

    Ashal

  2. Mohana Ganesh says:

    OK. Thanks for your advise.

    1. Ramesh says:

      A single fund, quantum long term equity fund OR uti dividend yield are quite ok for you. Hdfc top 200 is also fair. I am assuming you to be 50-60 years of age. The reason for the recommendation is you should first get a better idea about equity investing in next 2-3 years and then think about adding a mid-small cap fund. Also read more and understand more.

  3. Mohana Ganesh says:

    Thank you very much for your prompt reply. I was under the impression that one has to invest in at least 6 to 7 funds for diversifying.

    Investing in any FMCG share is expensive and hence I thought investing in FMCG Fund which invest in only FMCG shares which generally give very good returns. Your opinion please.

    1. investing in FCMG requires understanding of FCMGs. Only you will know when to exit and how to judge returns. Primary aim of equity investing is to get returns above inflation. Diversified equity MFs are good enough for that,

  4. Interest rate on FD should be declared each year for tax and not on maturity. TDS is common for everyone. Additional tax as per your slab has to be paid each year. So take this into account before deciding which is better.

    You dont need so many funds
    Quantum Long Term Equity and Franklin India Blue Chip should suffice.

    Or
    SBI Emerging Bussiness Fund and Quantum Long Term Equity if you want to invest from your list. Do make sure there is not much overlap in stock holdings

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