I work with a private firm and earn Rs 34,000 per month. In the current market situation, which debt funds would you advise me to invest in? Also, now that Reserve Bank of India (RBI) has kept rates unchanged, does investing in debt funds make more sense? Should one opt for a long-term or short-term debt?
A declining rupee has played spoilsport by almost neutralising any gains from the falling commodity prices. Consequently, inflation has continued to remain stubbornly high. Therefore, it is unlikely that the RBI will cut interest rates aggressively. Hence, it is advisable to invest in short-term debt funds as of now.
I am planning to invest in gold for my daughter (18) taking the exchange traded funds (ETFs) route. I plan to remain invested for four to six years. I want to use this gold during her marriage, which will act as an investment for her future. I want to know if investments in such gold ETFs can be converted into physical gold (on maturity/booking profits). Please advice.
Some mutual funds do provide this facility, at a cost. You may instead want to consider using the e-gold facility of the National Spot Exchange, which helps you buy gold in the demat form. This will also help you in converting your e-gold into physical gold, on need, at no extra cost.
I have a surplus of Rs 10,000. Which product should I invest in? I can take little risk but don't have any goal in mind now.
You can invest in a bank fixed deposit or a short-term debt fund. These options give you reasonable returns, with minimal risks.
Does it make sense to invest in tax-free bonds in the secondary market? Due to some prior financial commitments, I wasn't able to invest in those bonds when they were launched. Kindly advice.
Yes, you could consider investing in the tax-free bonds from the secondary market. But, take the step only if the bond yields on (i.e. coupon or market price*100) are attractive.
While investing in equity mutual funds, which is a better option to put money in. Is the equity-diversified fund good, or should I opt for an equity-linked fund. Since both invest in almost similar stocks, I wish to weigh both options and take a tactical decision. Please explain.
An open-ended diversified equity fund is better than equity linked savings schemes (ELSS). This is because, open ended diversified funds have performed better than ELSS schemes over various periods of time. In addition, they are flexible enough to provide liquidity to the investor, whenever there is a need.
The writer is managing director & principal portfolio manager, Capital Portfolio Advisors.