Put FD maturity proceeds in fairness MFs if funding horizon greater than 5 years

I’m 45 years outdated and my financial institution FDs of ₹10 lakh will mature inside the subsequent 3 months. I don’t want to reinvest the FD maturity proceeds in financial institution FDs resulting from their low rates of interest. I’m aiming at an annual return of 8-9% and I’m comfy taking larger dangers. Please counsel some mutual funds to spend money on.

Answer by Naveen Kukreja – CEO& Co-founder, Paisabazaar.com.

Given the present rate of interest regime and prevalent market circumstances, incomes an annualized return of 8-9% from debt funds can be troublesome. While you haven’t disclosed your funding horizon, you’ve mentioned you’ve the urge for food to take greater danger. Hence, I counsel you to take a position your FD maturity proceeds in fairness mutual funds, offered you might be prepared to remain invested in them for greater than 5 years.

Distribute your FD maturity proceeds equally within the direct plans of Tata Index Sensex Fund or HDFC Index Sensex Fund; and Parag Parikh Flexi Cap Fund or Mirae Asset Emerging Bluechip Fund by means of the SIPs of 1-year tenure. Opting for the SIP route can scale back the market danger posed by over-valued market circumstances and would common out investments in case of steep market corrections. Route your SIP contributions by means of banks providing excessive yield financial savings accounts. The financial savings account rates of interest supplied by these banks can vary from 5-6.5% p.a. for deposit slabs of ₹1-10 lakh.

In case you’ve an funding horizon of lower than 5 years, then you possibly can make investments your FD proceeds lump-sum within the direct plans of those brief length debt funds — ICICI Prudential Short Term Fund and HDFC Short Term Debt Fund.

(Queries and views at mintmoney@livemint.com)

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