POSTED BY November 16, 2013 10:47 am COMMENTS (2)
ONI do have surplus funds of Rs.5.00 lac (for a period of 6 months to 1 year) which I intend to invest in good debt/liquid mutual funds which is providing competitive return.
I am still having 5 years of active service left.
Will you suggest some funds where such fund can be invested.
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For 6 months to less than 1 year I would suggest you to put in FD, as the tax implication would be same for debt fund investments if held for less than a year (i.e. short term capital gains from debt funds straight added to your taxable income and taxed as per slab). And even the 6-10 months FD rates (8% to 8.75%) are favorable than debt fund return of similar period (5% to 8.5%).
But if you think it will mostly extend more than 1 year then short term/ultra short term debt funds could be ideal choice because of both the return and tax advantage (Long term gains from debt funds are taxed either 10% or 20% with indexation, choose whichever is beneficial).
You can probably keep half on it in FD and half in short term debt funds to make a balanced approach.
The following could be your choice of short term fund:-
Peerless Short Term Fund (G)
Morgan Stanley Short Term Bond Fund (G)
Sundaram Debt STP AP
Thanks
Sumit
BNP Overnight or IDFC Cash.. both the liquid funds which are good..