Dhirendra Kumar sheds light on short-duration funds and compares them to FDs
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I have Rs 25 lakh kept for buying a house after three to five years. Where should I park this money? Currently, it is a mixture of liquid funds and FDs.
- Aditya Rathi
For a time period of three to five years and this kind of a goal, one can consider short-duration funds. Before selecting any fund, do all the relevant checks in terms of safety. Investing for a little more than three years in a short-duration-bond fund is desirable, as your return will be indexed. So, you will be liable for a much lower tax as compared to a fixed deposit (FD). Also, as compared to an FD, a short-duration fund is likely to get you a higher return. Having said that, don't try to maximise your returns for such a time frame and do not consider equity.