I want to invest about Rs 5-6 lakh for a period of 2-5 years for my son’s education. I don’t want any equity exposure. I will need about Rs 2 lakh per year from 2014 onwards. Please suggest some funds.
Given your timeframe and aversion to equities, we would suggest that you invest in a short-term bond fund or a dynamic bond fund. These funds are the best way to achieve superior, tax-efficient short-term returns.
The tax treatment on debt funds is pretty straightforward. Since you plan to hold your investments for over 1 year, you will have to pay either 10 per cent flat tax or 20 per cent after indexation.