Liquid or short term funds

[hamir]

Hi,

I need advice on how to keep money in debt instruments to get return more than bank fixed deposits. Queries that come to my mind are following:

1) To beat FD's what is recommended liquid MF's or short term funds or any other debt category?
2) When I think of investing in each category, what should be the term(period) to stay invested in them?

let me know if need any info from me to further understand query.

 

[hamir]

I am surprised...No comments till now!!

Do we need more information?

 

[nikhilfake]

Liquid funds are akin to Savings Bank accounts. They invest mostly in under-90days paper. Most Liquid Plus funds have no exit load and some have no exit load after 6 months. Park your money here if you want to use it within 6 months.

Short-term funds, on the other hand, typically invest in paper with 2-3 years of maturity. You can expect 6-8% yield here in a normal interest rate scenario.

Be advised, you CAN lose money in debt funds unlike FDs. That is strictly in the case when the interest rates rise, but longer the term of the paper, more you can lose. Thus, if you have money for 2-3 years, Short term funds provide good risk adjusted returns.

 

[ajay_ijn]

Hi,

I need advice on how to keep money in debt instruments to get return more than bank fixed deposits. Queries that come to my mind are following:

1) To beat FD's what is recommended liquid MF's or short term funds or any other debt category?
2) When I think of investing in each category, what should be the term(period) to stay invested in them?

let me know if need any info from me to further understand query.

if you want to consistenly beat FDs, PPF, Postal savings, then invest in MIPs (monthly income plans)
80 to 85% in debt and rest in equity. hence risk is slightly higher than pure debt funds.

long term performance of MIPs
http://new.valueresearchonline.com/funds/h2_typecomp.asp?mode=performancelong&Type=1&objective=19

 

[hamir]

Thanks for valuable inputs. I have further queries ...both were answered by different members.

Short term funds... As mentioned above " you can lose money in it and also interest rates you get is 6-8% " . Almost similar interest rate 6-8% you would get if you invest in FD. So is there any tax advantange with short term funds which makes them preferable above FD's? Also, the point that it's better to invest for 2-3 yrs, would that mean risk is lower if we invest for 2-3yrs ?


MIP's... What can I realistically expect from a MIP? Let's say if I invest Rs 1Lac in a good MIP then what is realistic expectation on returns? Also which MIP's are available in market with good track record and worthy of investment? I invest using ICICIDIRECT, so would I get periodic income(let's assume pay out is monthly) deposited in my linked savings account automatically ?

Sorry for lot of basic questions but would be definitely help all.

Thanks