Ask Value Research

Capital Protection

Investments in mutual funds come with different risks, know about them before investing

I want to invest Rs 2 lakh in a fund with the lowest or zero risk that protects my capital for three months to a year, which will fetch me more than 8 per cent tax free returns. Please suggest for a fund to invest in
– Prasad

For the time frame and risk profile you reflect, you should not look beyond bank fixed deposits. These are the only instruments that will guarantee your capital and pay interest above 8 per cent at the moment. Mutual funds do not guarantee capital protection, and for the time frame that you have in mind, liquid funds could be an option if you can muster some risk.

This article was originally published on November 25, 2010.

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