Any feedback on Kotak FMP (Fixed Maturity Plans)?
Kotak FMP Series 37 Debt Scheme | Tax Efficient Mutual Funds | Best Close Ended Debt Scheme In India | Invest In Fixed Maturity Plans
Why am I going for it ?
1. I am not comfortable with the market PE, as you would have noted in my previous posts that I am no fan of investing in market when PE is above 20. Since some time I have been reducing equity exposure and currently loaded with cash rotting in savings account.
2. From tax perspective better than FD.
FD returns are taxed at nominal rate, whereas this FMP is of duration 370 days (> 1 year) so will be taxed at 10% without indexation and 20% with indexation.
3. Two year indexation benefit won't be available for debt fund spanning 2 financial years after DTC effective 1 April 2012, so no point going for 13, 14 months FMP early next financial year.
4. Current CP/CD (Commercial Paper/ Debt) rates are hovering around 9.5 to 10 , FMP can lock these returns for a year.
I have two questions for the gurus
1.
General - Why should a person in highest tax bracket should ever go for an FD ? I now feel stupid why ever I went for an FD and paid extra tax when FMP were available. Is there any flaw in this statement?
Assumption - Risk associated with FMP is marginally more than the FD and should not be a cause of concern.
2.
Specific - I need feedback on Kotak FMP series. Any issues with Kotak that I should be aware of ? Would you suggest any other FMP ?
Kotak FMP Series 37 Debt Scheme | Tax Efficient Mutual Funds | Best Close Ended Debt Scheme In India | Invest In Fixed Maturity Plans
Why am I going for it ?
1. I am not comfortable with the market PE, as you would have noted in my previous posts that I am no fan of investing in market when PE is above 20. Since some time I have been reducing equity exposure and currently loaded with cash rotting in savings account.
2. From tax perspective better than FD.
FD returns are taxed at nominal rate, whereas this FMP is of duration 370 days (> 1 year) so will be taxed at 10% without indexation and 20% with indexation.
3. Two year indexation benefit won't be available for debt fund spanning 2 financial years after DTC effective 1 April 2012, so no point going for 13, 14 months FMP early next financial year.
4. Current CP/CD (Commercial Paper/ Debt) rates are hovering around 9.5 to 10 , FMP can lock these returns for a year.
I have two questions for the gurus
1.
General - Why should a person in highest tax bracket should ever go for an FD ? I now feel stupid why ever I went for an FD and paid extra tax when FMP were available. Is there any flaw in this statement?
Assumption - Risk associated with FMP is marginally more than the FD and should not be a cause of concern.
2.
Specific - I need feedback on Kotak FMP series. Any issues with Kotak that I should be aware of ? Would you suggest any other FMP ?