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Consider safety when investing for short term

Settle for moderate gains with low-risk investments as short-term volatility in equity funds can depreciate capital...

I want to invest around Rs 10 lakhs in any instruments for at least one year to get the maximum benefits. I am already putting around Rs 15,000 per month in MF for the past one year from my salary.
-Srinivasan

You want to derive maximum benefit out of your investment of Rs 10 lakh in one year. Maximum gains come from equity, albeit one invests for long-term. Short term volatility in equity funds can depreciate your capital as well.

We suggest you to be conservative and settle for moderate gains that come with lesser risk. You can consider investing in debt-oriented short-term funds for a one-year time frame. This category as given average returns at 10.15 per cent over last one year.

If you withdraw investments in debt funds before a year, the gains will attract short-term capital gains tax payable as per the tax slab. The long-term capital gains on debt funds held for more than a year is liable for long-term capital gains tax. This will be 10 per cent of gains or 20 per cent after indexation of gains plus applicable surcharge and education cess.

You can also consider a one-year bank fixed deposit for assured returns at around 7.5 per cent. Interest income from bank FD will be added according to your income and taxed at the tax slab applicable.



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