Is it a good time to invest in FMP?
Is it a good time to invest in FMP?
FMPs are ideal for those investors, who need returns higher than a regular FD but can accept the frequent NAV fluctuations. Compared to equity funds, FMPs are low risk-low return investments. Due to the restricted liquidity, investors who are ready to park their money for the NFO tenure can invest in this scheme.
Is FMP tax free?
FMPs are usually tax efficient. For a one-year FMP, the tax works out to 10% without indexation and 20% with indexation. Indexation benefit for FMPs are high, since the inflation rate is high, as a result, you may have to pay less tax for an FMP.
How is FMP calculated?
The scheme will invest 95-100 per cent in NCDs with 9.95-10 per cent yield. From the indicative yield calculated earlier, deduct the expense ratio (0.40 percentage points) to arrive at the approximate yield the FMP may generate. In the example, the annual indicative yield will be close to 9.5 per cent.
In which date maturity period is fixed?
Key Differences between FMPs and Fixed Deposits
| Comparison Criteria | Fixed Maturity Plans | Fixed Deposit |
|---|---|---|
| Liquidity | Low Liquidity | Premature withdrawal options with penalties available (more liquid than FMPs) |
| Maturity Options | Varies for each scheme (typically 3-4 years) | Varies by a bank (typically 7 days to 10 years) |
What are the different types of HDFC Mutual Funds?
Know the yearly and monthly performance of HDFC Mutual Funds like Children’s Gift Funds, Equity Growth Funds, Fixed Maturity Plan (FMP), Exchange Traded Fund (ETF), Liquid Funds, Debt Income Funds, Fund of Fund Scheme. UPDATES & NOTIFICATIONS Download Factsheet
Should you invest in a fixed-FMP fund?
FMPs are ideal for investors who do not want to time the interest rate cycle and would rather keep their investments locked in close-ended funds. If you are an investor who wants to be safe from the volatility of interest rate risk and want to invest for the longer term (over three years) FMPs would yield superior rates.
What is the capital gains tax on FMPs?
Short-term capital gains tax is applied as per your income tax slab on any FMP with a tenure of less than 36 months. If you hold your FMPs for more than 3 years you can reap the benefits of indexation and get superior returns over a fixed deposit of the same tenure, especially if you are in the highest tax bracket.
What kind of debt do FMPs invest in?
FMPs invest in debt instruments such as corporate or Government bonds, commercial papers (CPs), certificates of deposit (CDs) and other money market instruments. The debt instruments chosen for FMPs have maturities that are in line with the tenure of the scheme.
