I often get the impression reading Business Newspapers and watching business TV channels that anybody and everybody is investing in stocks. Except me! But then the fact is that less than 10% of household savings enter the stock exchanges.
Roughly 55% goes to fixed deposits of Banks. Now that is an easy and safe option for those who don’t want to take risk.
But even when you don’t want to take risk, there are far better options. Like the ones below. These are debt oriented hybrid mutual fund schemes that gives much more return than your fixed deposits. Generally, their objective is to provide income and capital appreciation along with diversification by investing in a basket of debt and equity mutual fund schemes.
Additionally, Investing in fixed-income products through mutual funds carries a distinct advantage over bank deposits and post office monthly schemes in that the returns are earned by way of dividends that are tax free in the investors’ hands as opposed to interest earned on deposits which are taxable. Hence, while comparing these products it is important to check the post-tax returns — and these could vary depending on your tax slab as well
|
|
Return |
Ratio |
|
Birla Sun Life Asset Allocation Conservative |
19.50 |
0.35 |
|
HDFC Multiple Yield |
20.37 |
1.75 |
|
UTI CRTS 81 |
22.25 |
1.40 |
|
UTI Mahila Unit Scheme |
21.30 |
2.21 |
While you research these Mutual Funds, it is important to look at a few things.
Like the AUM (Asset Under Management). Bigger is better.
Or the expense ratio. Lower is better, obviously.
And the Fund Objective. Is it in sync with your asset allocation policies?
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Interesting. But isn’t there a risk that the NAV will decline when the interest rates increase. If the investor does not time the entry and exit, are there any chances of capital erosion?