Hi,
I want to invest the cash lying idle in my Savings bank A/C. I will have need of this cash in about 01-1.5 years time.
1.) What would be best short term investment option , keeping post Tax returns in mind ( I fall in 30% Tax slab)
2.) Is it advisable to invest large chunk or 100% of my savings. As we do with FD?
3.) What percentage of returns can I expect?
Thanks
Animesh
10 Answers
Dear Animesh,
You may consider options like Ultra Short term Debt funds / Arbitrage Funds.
Kindly note that returns are not guaranteed and even debt funds do come with certain amount of risk. Hope you are aware of this fact!
You may expect returns of around 6 to 8%. Gains on Arbitrage funds are tax-free, if units are held for more than 12 months.
Kindly read :
https://www.relakhs.com/debt-funds-types-benefits-risk-vs-return/
https://www.relakhs.com/best-debt-mutual-funds-india-top-debt-funds/
https://www.relakhs.com/best-arbitrage-funds-returns/
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
Hi Sreekanth thank you for guiding me on this and providing must needed insight on the topic.
What would recommend on investment 1-1.5 year horizon on this fund : ICICI Prudential Blended Plan - B - Direct Plan (G) , lumpsump .
Else, if you may suggest any other similar fund Arbitrage/ArbitragePlus.
Thanks
Animesh
Hi,
One more query on this...
Is it advisable to invest in two different Arbitrage funds simultaneously, instead of investing all money in one??
Hi Sree,
I have similar query, I have some cash(50 k now + approx 20k/pm until December) which i would be require after 6-12 months time i.e. around march -june 2018 time. This cash I would use to payoff my auto loan as a prepayment which i took this march only, I am not prepaying it right now as there is penalty for the same.
But i would obviously dont know monthly 20k i would be save or not hence not be able to make SIP or RD.
Also, i would rather want more return than normal fd/rd rate but i dont want to take a risk of investing in equity as well as i may not know if after 8-10 months i would get back my principal as well.
Please guide if short term debt fund or investing in balance fund which one is better option for me.
Thanks
Sameer
Dear Sameer,
If you are ok to take some risk, you may consider investing in an Ultra Short term debt fund.
In case, you can hold the investment for just over 12 months period then you may consider an Arbitrage fund (as capital gains are tax free after 1 year).
If you cant afford to take some risk and investment period is less than 12 months then you may save it in a bank FD.
Kindly read :
https://www.relakhs.com/debt-funds-types-benefits-risk-vs-return/
https://www.relakhs.com/best-arbitrage-funds-returns/
(Next time, kindly post your questions in a new thread, thank you!)
Thanks Sree, I have gone through the links that you provided in your reply. hence would like to know which arbitrage fund you would recommend for me, i would hold it for 1 year as noted by you. and is it fine if i invest in one fund or maybe in 2-3 funds?
Dear Sameer,
One fund can be considered. Ex : ICICI Equity Equity Arbitrage fund / Kotak Equity Arbitrage Fund.
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