Photo: iStockphoto
Photo: iStockphoto

Consider liquid funds for short term investments of 6-9 months

Even among debt funds, some schemes could be considered risky (like gilt and credit risk funds); liquid and ultra short-term funds are safer

I had accumulated Rs50 lakh for my daughter’s wedding by investing in mutual funds for 15 years. My daughter will get married in November and I want to park this money in debt funds. However, I have never invested in them. Please suggest few schemes where I can park this money. —Paresh Rana

Firstly, congratulations on employing mutual funds for saving and investing for a financial goal and realizing it after all these years. For a time period of 6-9 months, you cannot take much risk with the money you have. Even among debt funds, there are schemes that could be considered risky (funds such as gilt funds and credit risk funds). It’s best for you to stay with liquid funds and ultra short-term funds. Parking 50% of your money in well-rated funds in these two categories would keep your money relatively safe and could give you returns better than short-term fixed deposit or bank savings accounts.

I want to invest Rs40,000 every month in four systematic investment plans (SIPs) of Rs10,000 each. My appetite for risk is moderately high and I intend to invest for at least 25-30 years. The schemes I have chosen are Mirae Asset Bluechip Emerging Fund, Kotak Select Focus, Tata PE fund and HDFC Balanced fund. Are these good schemes? Please advise if I should switch one of these with some other scheme. —Jaishree

You are planning to invest in a portfolio that would have more than 90% of its inflows going into the equity market and less than 10% to the debt market (in the form of the debt component in the balanced fund). This is quite an aggressive portfolio. However, considering that your risk appetite is moderately high and that you have a long time frame (in excess of 25 years), this is a reasonable allocation. You have to ensure, however, that you stay invested in such a portfolio (although the funds may change over the years during reviews) through the course of your horizon without yielding to the temptations of the market. The funds you have are good funds—you have one large-cap-oriented fund (Tata), one diversified fund (Kotak), one mid-cap fund in Mirae Asset, and a bellwether balanced fund.

This set would give a good coverage of the equity market with a sprinkling of the debt market and would do well over the long term. As indicated earlier, please review the portfolio annually to ensure that these funds stay true to their promise and deserve their place in your portfolio.

I invested in tax-saving bonds issued by ICICI Bank in February 2003. I had given the option of automatic credit of redemption proceeds to my savings bank account. However, the account was closed inadvertently. In the meanwhile, I misplaced the bond certificate which I found only last month. Would it be possible to redeem the bond now for its principal and interest? —Dushyant Mahadik

It looks like you have invested in an infrastructure tax-saving bond that was issued during that period. You must have purchased it at your local bank branch where you held your account.

To remedy the situation that you are in right now, you would need to approach the registrar and transfer agent (RTA) of the bond. This information would be available in the bond certificate. The RTA is the record keeper of such bonds and would have you in their database of subscribers to this bond.

You will need to talk to them to get the record updated with your new bank account details. Once that is done, you can seek to redeem the bond and get your payouts.

Srikanth Meenakshi is co-founder and chief operating officer, FundsIndia.com.

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