debt mutual fund

Monthly Income Plan – Alternative to Bank Fixed Deposits?

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monthly income plan investment

Query:

I was looking at a Monthly Income Plan (MIP) both conservative and aggressive as an alternative to FDs. Is that also a good option?

My goal is to distribute my Debt portfolio from Bank FDs. Debt funds are as good as FD but with TAX benefit.

I believe because of the small equity component ( 0% to 30%) in Aggresive MIPs they can offer a good return in debt portfolio with low risk which makes it better than Balanced Equity Funds and Debt Funds on either side of investments.

Hence I believe along with Bank FDs, Debt Mutual Funds a person should also diversify and invest in Aggressive MIPs as one of the debt instruments.

What is your thought on this?

– Investor

Here’s my response:

To begin with, let’s do an overview of a Monthly Income Plan or MIP.

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Bank FDs or Liquid, Ultra Short funds plus MF taxation

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Alternative to a Bank FD- ultra short term, liquid

There are 3 posts that appeared on Unovest Blog and unless you have signed up to receive the posts in your inbox, you are likely to have missed reading them. What is the investment alternative to Bank FDs? Alternative to Bank FDs has been one of the hottest searches by investors. Low returns plus the taxation doesn’t make it attractive … Read more

Investing in Debt Funds – an insider’s perspective

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Investing in Debt Funds - An insider's perspective

I believe debt funds can play an important role in an investment portfolio. I just don’t know what and how. That’s where I reached out to Akhil Mittal, Senior Fund Manager – Fixed Income with Tata Mutual Fund. He is the expert and he was kind enough to share his views and help me learn more about debt funds.

Just to let you know, Akhil manages the following debt fund schemes at Tata MF.

  • Tata Dynamic Bond Fund
  • Tata Short Term Bond Fund
  • Tata Income Fund
  • Tata Income plus Fund
  • Tata Gilt Securities Fund
  • Tata Gilt Short Maturity Fund
  • Tata Gilt Mod Term Fund
  • Tata Floater Fund

He also manages debt portion of some hybrid funds (Tata Balanced Fund, Tata Young Citizens Fund, Tata Regular Savings Equity Fund, Tata Retirement Saving Fund – Moderate & Conservative Options, Tata MIP Plus Fund, Tata Young Citizens Fund and a few FMP’s for Tata Mutual Fund.

Here we go.

VK: Hi Akhil, this is going to be unlike any other conversation that you might have had before.

You are a debt fund manager, the specialist. I come to you as a layman to understand debt funds and how can I use them best. I have questions, which I want to ask you and get clarity about investing in debt funds. Can I?

AM: Sure, please go ahead.

VK: OK. Here’s the first and the obvious one. What role can a debt fund play in my portfolio, any investor’s portfolio?

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Should you invest in an FMP or Fixed Maturity Plan?

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Should you invest in an FMP?

If you have been bombarded recently with emails from various fund houses announcing several fixed maturity plans or FMPs, as they are popularly known, then you are not alone.

FD returns have gone down recently and fund houses are doing their best to offer an alternative to the ‘safe return’  seeking population.

If you have come across an FMP sales pitch, it almost always is that “it is as safe as a Bank FD”, yet, “it will give higher returns than an FD.” An easy lure for most investors since ‘safe returns’ is a primary criteria.

Let’s build a perspective on FMPs and should they become a part of your portfolio?

What is an FMP or a Fixed Maturity Plan?

If you have invested in a Bank FD before, you know that it comes in for different tenures of 1 year, 3 year, 5 year, etc. 

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Debt mutual funds: Which ones to invest in?

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debt mutual funds

In an earlier post, we built a winning equity mutual fund portfolio. This time we will look at debt mutual funds and see which ones can best deliver on your investment goals.

As I set out to select debt mutual funds, I realised this huge challenge staring at me. If selecting equity funds was like running a marathon, selecting debt mutual funds is akin to climbing Mount Everest.

Why?

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Is a fixed deposit your only option?

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Fixed Deposit

“So you have spare money in your bank account“, I repeated to confirm what Ajay just told me. “What are you planning to do with it?“, I further asked. “Well, It’s about Rs. 5 lacs and I can put them towards my emergency funds. I guess I will create a Fixed Deposit.” Ajay seemed to have made up his … Read more