Investing in MIP

#1
Can I invest in MIP online? I have a demat account. Or do I need to take it at AMC office. I will prefer to invest online if that option is available. Please guide me.

Also please advise on some good MIPs. Is Reliance MIP a good fund to invest in? Can I do MIP with growth option so that divident is reinvested? Also is it advisable to invest lumpsum together in MIP?
 

milind

Active Member
#2
Can I invest in MIP online? I have a demat account. Or do I need to take it at AMC office. I will prefer to invest online if that option is available. Please guide me.

Also please advise on some good MIPs. Is Reliance MIP a good fund to invest in? Can I do MIP with growth option so that divident is reinvested? Also is it advisable to invest lumpsum together in MIP?
You don't need a demat account - but need a folio at the AMC. (these days, one can buy MFs on exchanges - but why would I pay commissions on that? Been happy dealing with AMCs directly). Reliance MIP is one of the good ones. You can go to Reliance MF office and fill up an application form there. Later investments can be done online once you get your PIN.

Div Reinvest and growth are not different unless taxation makes them different for you.

MIP is about 10-20% in equity, rest in debt. SIP, although not mandatory, I would still split the investment in few chunks.

As always, do your own research before investing.

-- Milind
 

nikrod

Active Member
#3
Can I invest in MIP online? I have a demat account. Or do I need to take it at AMC office. I will prefer to invest online if that option is available. Please guide me.

Also please advise on some good MIPs. Is Reliance MIP a good fund to invest in? Can I do MIP with growth option so that divident is reinvested? Also is it advisable to invest lumpsum together in MIP?
With MIP's Growth & Dividend Re-Investment options work out differently. MIP's are taxed as per the debt fund norms. That means dividend distribution tax of 12.875% (12.50% + 3% education cess) will be deducted by fund houses. Growth option is taxed as per the Short & Long Term Capital Gains norms. STCG being included in income slab & LTCG 10% (20% with indexation).

For an example If you invest Rs. 1,00,000 each in Growth & dividend Re-Investment plan of MIP. Assume that MIP gives 1% dividend after a month, The Dividend Distribution Tax would be 12.875% on 1000 i.e. Rs. 128.75.

The amount in Growth after 1 month = 1,01,000
The amount in dividend Re-Investment after 1 month = 1,00,871.25

Note that if growth option is redeemed after 1 month, tax applicable would be as per the individual tax slab.

The conclusion is that if your horizon is less than one year, go for Growth option if you fall in 10% tax bracket. Go for Dividend-Reinvest otherwise.

If your horizon is more than one year, Growth option will work out better.
 
#5
Thanks Nikrod and Milind.

Few more questions:-

1. If I invest in MIP with growth option for more than 1 year, then there are no taxes involved. Is this assumption correct?

2. Is it a risk if I do lumpsum MIP for Rs. 1 Lakh and do not break it into multiple investments?

3. How do I get the online PIN and what is the process of doing later investments online?

4. Do HDFC and L&T AMCs also provide the PIN for online investment of MIP?

5. Along same lines, I am doing SIP in following MFs and want to know if they provide ability for online SIP and can I move to online while in the middle of ongoing SIP. What is the process to get access for online SIP:-
DSPBR Equity-G
HDFC Top 200-G
ICICI Pru Infrastructure-G
IDFC Premier Equity Plan A-G

6. If I have HDFC Top 200 SIP and HDFC MIP both from HDFC then do I need two different pins or just one PIN?
 

nikrod

Active Member
#6
Thanks Nikrod and Milind.

Few more questions:-

1. If I invest in MIP with growth option for more than 1 year, then there are no taxes involved. Is this assumption correct?
No you are wrong. MIP's will be taxed as debt funds. That means 10% tax on capital gains or 20% tax with indexation.

2. Is it a risk if I do lumpsum MIP for Rs. 1 Lakh and do not break it into multiple investments?
There is risk involved but is considerably less than lumpsum investment in equity. If you invest 1 lakh in MIP at a time, only 15-20,000 out of it is invested in equity. If your total portfolio is larger than 3-4 lakhs, you can go for lumpsum investment of 1 lakh in MIP as it won't hurt portfolio as whole.

3. How do I get the online PIN and what is the process of doing later investments online?

4. Do HDFC and L&T AMCs also provide the PIN for online investment of MIP?

5. Along same lines, I am doing SIP in following MFs and want to know if they provide ability for online SIP and can I move to online while in the middle of ongoing SIP. What is the process to get access for online SIP:-
DSPBR Equity-G
HDFC Top 200-G
ICICI Pru Infrastructure-G
IDFC Premier Equity Plan A-G

6. If I have HDFC Top 200 SIP and HDFC MIP both from HDFC then do I need two different pins or just one PIN?
For these questions, I have no answers. You should consult some MF distributer or contact AMC's call centers directly for this info.
 

nikrod

Active Member
#8
If there is 10% tax on capital gains or 20% tax with indexation, is MIP still better than bank FDs? Please explain the math.
If you fall in 10% tax bracket, FD's upwards of 8% returns will be better. MIP's still have an edge with equity though it could be disadvantage in bear market.

Fot those in 20-30% tax bracket MIP's & debt funds will proove better than FD's.
 

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