After having a view on the Bond market and the impending rate cuts by RBI, here's an investment advice to gain from easing interest rates. Now you can earn more than a Fixed Deposit; Pay Lower Taxes and that too without putting your money to the risks of equity markets.
Yes, the key lies in selecting the right Debt Mutual Funds!
Interest rates are easing out and are not far from finding the downside direction.?As a smart investor, you care about your money; hence you will definitely want to make the most of your money by investing carefully and at the right time.
You may also be worried that you may not get these high rates again and want to make the most by parking your surplus at high interest rates.
But before you jump to the closest Bank's Fixed Deposit, STOP!
While there is no doubt that Bank Fixed Deposits come with the highest safety, the biggest disadvantage about them is that, you pay upto 30.6% tax (if you happen to be in the highest tax bracket) on the interest income. Even if you hold them for over 1 year.
Instead, if for over 1 year, you were to invest in debt instruments that we are talking about, then your tax pay out would be only 10.3%(or 20.6% with Indexation benefit).
This strategy gives you better post tax returns (more than Fixed Deposits) and without being subject to higher risk such as the one in equities or stocks.
So, what do you do? Simple, Invest in Debt mutual funds.
Debt Mutual Funds provide you exactly that benefit... returns like Fixed Deposits but at lower taxable rates. They deliver to you better post-tax returns.
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Source: http://personalfinance201.com/Mutual-Funds-India/investing-in-debt-mutual-funds-a-good-idea.html
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