Fixed Income is an essential part of your financial planning. Efficient Fixed Income enables you to reduce your financial liability to the minimum. This is done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances while ensuring that your investments are in line with your long term goals.
The company deposits come with a lock-in period of a few years and these schemes offer attractive returns. Investors should read the risk document and analysts' opinions carefully before taking any investment decisions.
Debt-based mutual funds
Investments in liquid mutual funds and debt based mutual funds are equivalent to bank deposits. These funds invest in risk-free government securities and top-rated corporate deposits, and offer slightly higher returns than bank deposits. Investors looking for a regular income can select schemes under the monthly income plan.
Debt oriented mutual funds :
Mutual funds having a portion of exposure to equity to enhance returns and also providing safety.
Capital Protection Schemes (CPS)
Fixed Maturity Plans (FMP)
Monthly Income Plans (MIP).
Both FMP and CPS are close-ended funds while MIP are usually open-ended.
FMP invest in debt securities with a similar tenure as that of the scheme. They stay invested in these debt securities, which results in the FMP investor knowing what his expected return on the FMP will be. FMP seek to offer the investor optimum income from debt investments for a particular tenure.
CPS seeks to protect their investors investment amounts, i.e., the capital invested, by CPS investors. In other words, the investor in a CPS will get back at least his capital invested, when the scheme matures (10-15% in equity)
MIP seeks to offer the investor returns that are marginally higher than debt investment returns by investing a portion of the corpus in equity. (10-20% in equity)
Investors looking for long-term investment instruments should also consider tax-saving instruments like provident fund (PF, PPF, VPF etc), NSCs, infrastructure funds etc.
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