I wish to invest roughly ₹40 lakh I received at the time of my retirement for five years. My primary aim is to protect the capital from inflationary pressure with moderate gains after paying taxes. I am in the highest Income Tax slab of 30 per cent.
- Mohan Singh
We are assuming that you have a regular income and you are investing this money to supplement your income. Here are a few options you can consider. One, you can consider investing a part of the money in arbitrage funds. These funds look for arbitrage opportunities between cash and future markets. They don't invest directly in equity, but they are treated as equity funds for the purpose of taxation. This means you can claim long-term capital gains tax of zero if you hold your investments for more than a year. Two, you can consider investing in dynamic bond funds with an investment horizon of more than three years. These debt funds have a dynamic portfolio depending on the view of the fund manager. If you are ready to take a little more risk, you can consider investing a part of your corpus in Monthly Income Plans (MIPs) or debt-oriented hybrid (or balanced) funds with an investment horizon of more than three years. These schemes invest a small part of their portfolio in equity and that can boost your returns. It is very important to have an investment horizon of more than three years while investing in these options as investments in debt schemes qualify for long-term capital gains tax of 20 per cent with indexation benefit only if you hold the investment for more than three years. Lastly, if you can take more risk, you can consider investing in equity-oriented balanced schemes with an investment horizon of more than five years. These funds invest in a mix of equity (at least 65 per cent) and debt and they are less volatile than pure equity schemes. They may offer your super returns in five years.
This article was originally published on December 29, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
