[kap04]

India’s net mutual fund investment fell by 43% month-on-month to Rs 1.08 lakh cr in Aug. Equity mutual fund investments rose 3%, debt mutual fund investments fell 62%, and sectoral/thematic mutual fund investments fell 1%: AMFI.


https://www.livemint.com/mutual-fund...956498375.html

[SmartCat]

Originally Posted by drive.helios

Isn't 10 funds to hold 15L an over kill and 15L for contingency? Wouldn't it be better to keep 10 aside (liquid/arbitrage/ gilt) for it and already move 5L to a dedicated fund for her daughter to manage college? Invest the 15L equally into an index fund, a flexi cap fund and a mid and large cap fund to keep it simple ?

1) It is 5 equity funds for Rs. 15L, not 10. For liquid funds, I have asked him to choose 5 more.

2) There is no "overkill" when you choose (5 + 5) funds, because there is zero downside & only upside. Splitting capital into multiple funds gives the benefit of diversification, as a fund manager might underperform for a couple of years

3) "Difficult to track 10 funds" is a problem only for those who track funds frequently and want to take decisions. Solution is to not bother checking the performance of funds and not taking decisions. Once you have the basics in place -

a) Category (eg: Large & Midcap, in this case)
b) Risk adjusted returns (eg: 4 or 5 star rating)
c) Brand name (eg: ICICI)

it is unlikely an investor will go horribly wrong over longer term.

4) "One index fund, one flexicap fund, one midcap/smallcap fund" advice seems reasonable. But then, you have to recommend names of the funds, which I don't want to . My advice meanwhile puts the onus on OP to pick and choose funds from a single link, based on certain filters.

[Capri89]

Originally Posted by Murli

Hello fellow members,

I would appreciate your advice regarding mutual fund investments for my daughter.

Whatever funds you decide to invest in please take the direct mode (not regular).

[warrioraks]

Originally Posted by Murli

Hello fellow members,

I would appreciate your advice regarding mutual fund investments for my daughter. Here are the key details:
.....
Contingency Fund: What amount should be allocated, and which mutual fund category would be ideal for this purpose?
.....
Investment Strategy: Should we invest the entire Rs. 31 lakhs as a lump sum or spread it out over 12 months via SIPs?

Mutual Fund Selection: Considering her risk tolerance and investment horizon, which mutual funds or categories would you recommend? We're aiming for a mix of safety and growth.

Do not invest lumpsum in equity. Better do SIP. What is your investment horizon and specific goals, if any?

Originally Posted by SmartCat

- Invest Rs. 15L in liquid mutual funds. It gives equivalent to 1 year bank FD returns. This will take care of emergencies too. So no need to plan separately.

Might be better to park in arbitrage vs liquid funds due to better taxation.

Originally Posted by kap04

India’s net mutual fund investment fell by 43% month-on-month to Rs 1.08 lakh cr in Aug. Equity mutual fund investments rose 3%, debt mutual fund investments fell 62%, and sectoral/thematic mutual fund investments fell 1%: AMFI.

Read this news last night and was really concerned with 43% dip. But then realized it is the debt MFs which are driving it. Wondering what's happening there. This is the best time to invest in debt considering where we are with the rate cycle.

[whitewing]

Originally Posted by warrioraks

Read this news last night and was really concerned with 43% dip. But then realized it is the debt MFs which are driving it. Wondering what's happening there. This is the best time to invest in debt considering where we are with the rate cycle.

I suppose with the indexation being done away with for LTCG, the money is getting invested in alternates like bank FDs?

[DigitalOne]

Originally Posted by warrioraks

But then realized it is the debt MFs which are driving it. Wondering what's happening there. This is the best time to invest in debt considering where we are with the rate cycle.

Originally Posted by whitewing

I suppose with the indexation being done away with for LTCG, the money is getting invested in alternates like bank FDs?

Possible. Though from a taxation perspective, debt funds are still a better alternative to FDs. FD interest get taxed on accruals, whereas Debt funds get taxed only on redemption. In other words, you have to pay tax (as TDS or self-declaration) even on cumulative FDs where you are actually getting zero interest in the interim years.

Just a couple of days back, I had an interesting conversation at a nearby ICICI Bank where a knowledgeable customer was complaining to the deputy branch manager about an issue with the Annual Income Statement (AIS). As per the customer, suppose one creates a quarterly FD (say, 10 Lakhs) and reinvests this in a new FD on maturity after 3 months. Suppose this is done 4 times in the FY. This gets reported in the AIS as 40L investment (10L x 4) for the FY, whereas the actual principal/investment is only 10L. This could lead to scrutiny as the reported investment (40L) could be significantly higher than the person's income. The deputy branch manager while acknowledging this issue exists in the system, said that this is not specific to ICICI, and this has been raised with Income tax department. While it may be known to the IT department, just wanted to inform here so that there are no surprises.

[skumare]

Originally Posted by DigitalOne

...As per the customer, suppose one creates a quarterly FD (say, 10 Lakhs) and reinvests this in a new FD on maturity after 3 months. Suppose this is done 4 times in the FY. This gets reported in the AIS as 40L investment (10L x 4) for the FY, whereas the actual principal/investment is only 10L..

One more reason why investing in Debt funds is better than in FDs. One can invest in debt funds with periodic payout of interest (if required) or simply in growth mode. Except the T+1 credit of funds (at redemption time), debt funds are better in all aspects.

[saket77]

Originally Posted by warrioraks

This is the best time to invest in debt considering where we are with the rate cycle.

Given the eminent rate cuts, this can be great time to invest in Gilt funds. I expect double digit returns from these funds over the next 1-2 years.

[warrioraks]

Originally Posted by whitewing

I suppose with the indexation being done away with for LTCG, the money is getting invested in alternates like bank FDs?

Wasn't the indexation benefit on debt funds removed in March 2023?

Originally Posted by skumare

One more reason why investing in Debt funds is better than in FDs. One can invest in debt funds with periodic payout of interest (if required) or simply in growth mode. Except the T+1 credit of funds (at redemption time), debt funds are better in all aspects.

Although I agree with you on debt funds being better than FDs, both have different risk profiles. Debt funds have interest rate risks which FDs do not have. One needs to consider this before switching from fixed deposits.

As far as I know, only one class of debt funds - 'target maturity funds' provide a confirmed yield and that too when held till maturity. Any redemption prior to the maturity can have lesser returns (vs yield to maturity) or even capital erosion.

But having said that, anyone in higher tax brackets should take a serious look at debt MFs vs parking money in FDs.

[whitewing]

Originally Posted by warrioraks

Wasn't the indexation benefit on debt funds removed in March 2023?

Removed in the recent budget

Debt Funds have indexation benefit?Upto 23rd July 2024, In the case of debt funds, which are long-term in nature, capital gains are arrived after indexing the purchase price of the investment. long-term capital gains on debt funds are taxable at the rate of 20% with the benefit of indexation. However, starting from July 23, 2024, following the Budget 2024 changes, long-term capital gains on debt funds will be taxed at 12.5% without the benefit of indexation.

https://cleartax.in/s/indexation-hel...ebt-fund-gains

[warrioraks]

Originally Posted by whitewing

Removed in the recent budget

https://cleartax.in/s/indexation-hel...ebt-fund-gains

I have a different understanding. The 12.5% tax rate and indexation removal is only applicable for debt MFs bought before 1st April 2023. For everything bought after that, the gains were already taxed at slab rates and will continue to be taxed the same.

https://economictimes.indiatimes.com...8.cms?from=mdr

[tasty911]

Originally Posted by Murli

Hello fellow members,

I would appreciate your advice regarding mutual fund investments for my daughter. Here are the key details:

Dependents: 1 daughter (15 years old)

Keep in mind that you would need some fund for the kids college in approx 3-4yrs time.
This is quite short period for equity investment. It would be prudent to keep the amount you need for college in low risk investments like FD/liquid funds etc

[murlidar]

How about Equity Savings mutual fund category? As it is considered a equity fund for taxation. LTCG after 1 year, 12.5% tax after 1.25 lakhs exemption. portfolio is 30% equity, 35% arbitrage and 35% debt. Returns are better than debt funds and similar risk.

[tasty911]

Originally Posted by murlidar

How about Equity Savings mutual fund category? As it is considered a equity fund for taxation. LTCG after 1 year, 12.5% tax after 1.25 lakhs exemption. portfolio is 30% equity, 35% arbitrage and 35% debt. Returns are better than debt funds and similar risk.

For an Equity fund, return would be higher or lower than debt fund because of that 30% equity investment. Risks will also be higher.

[ZMG]

Hi All
I am seeing Dividend in my transactions on Coin (Zerodha) for some funds (Tata Digital, UTI momentum 30) - does anyone know what this is ?
My investments are all in Growth mode and not IDCW.