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.