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POSTED BY ON December 17, 2010 1:48 am COMMENTS (4)
I have 13-14 lacs available for investment. I might buy some property in another 1-2 years(not sure about exact time). Till that time I would like to invest this money. I am thinking of two options
1. Bank of maharashtra has FD with interest rate of 9% for senior citizens. My father is retired staff member of the bank so he will be getting 1% extra which makes it as 10% annual interest. So my father can put it in fixed deposit in his name(and me as nominee). His income(i.e. pension + annual FD interest) should not attract any tax(he will submit 15H form for the same). If I need the money in between I can break FD where there is only 1% penalty. in that case 9% interest also looks fine.
OR
2. To invest in one of the debt fund like Reliance MIP or HDFC MIP. Here the returns could be nice(11 or 12%) but there is little risk associated with it.
Please let me know readers view about my options or suggest other options
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Amol
I am not sure how seriously you are looking at taxation , but as per clubbing rules of income tax , it does not work the way you think so .
The interest earned out of the FD will not be his income, it would be YOUR income , because the source of the fund is you.
Its a common myth that one can just invest the money in some one else name and the income arising out of that will be treated as the other person income , Tax rules do not support it . Offcourse you can do what you said saying that these small ticket transactions does not come under enquiries , but still just for your information I am telling you .
I understand that this “Jugaad” will work in real life !
Manish
FD for sure!! debt funds are not 100% risk free and can go down in short term as well. FD at 10% rate is very good for investment at this point of time.
I like to suggest the FD option for the following reason:
a) attractive interest rate at 10% with nil tax liability;
b) liquidity – since you may take the money from bank fd at any point of time with little loss.
I would suggest you to go with FD because couple of reasons.
1. Expecting 10% return in short term investment anywhere other than FD is risky.
2. Reliance and HDFC MIP’s have given negative return with short term.
Getting 10% on FD is very rare through banks. I think its best to go with FD as it is always available for you anytime for withdraw.