Short Time Investment Plans

Short Time Investment Plans
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                      If you are looking for liquidity (you want to withdraw any time you want within a day) and tax free returns go for the Liquid/Liquid Plus Funds/Cash Funds with Daily Dividend or Weekly Dividend options.


  I do this whenever I have surplus money to make it liquid and tax free and then wait to do proper investment. Don’t opt growth because if you take money out within a year, it will be short term capital gains.


  But again this is MF and you must have competed KYC if investment is more than Rs.50,000. Returns are comparable to bank FD’s and even better as rates move up during crunch situation best you can withdraw any time you want say you give switch out request before 1 PM, you get money next day in your bank.


If you are ok with FD’s you can do it, but beware once you cross the limit, TDS is applicable. Also if you are a honest tax payer, your returns are taxable. Even your savings bank interest is taxable.


Alternatively you can go for FMP’s which give better returns if you know the exact tenure. Now we can get FMP’s even for a month.


Based on term many banks offer attractive rates and all banks have revised rates in Jan 1st week on the upper side due to liquidity crunch.


I assume by investment you mean atleast one lakh to 5 lakhs. 


Some of good Liquid Funds I use are LIC Liquid, SBI Magnum Cash, IDFC Savings Cash – All these are money market funds. Returns are like 5.7-6 % current and are like Savings bank account interest.


 Go for Daily dividend reinvestment. I usually put money here for a week or 2 weeks etc till I finalize my long term investment.If you know you are going to keep at least 180 days go for Short Tem Debts funds like the Floaters with weekly dividend reinvestment. 


If more go for FMPs.


It really depends on Risk (above all are mostly risk free), Taxation, Tenure, Invested money etc.