One minute guide to understanding a fixed maturity plan

One minute guide to understanding a fixed maturity plan

0-15 seconds

What am I?

I am a fixed maturity plan. I am just a mutual fund that does something a little different than your usual boring old diversified equity fund.

15-30 seconds

What is my claim to fame?

I give returns that are a little better than a fixed deposit (FD) because of my unique tax treatment. Since I carry very little risk, you’re practically getting a much higher tax-adjusted return.

30-45 seconds

How to best use me

I am meant only for those with a fixed short- to medium-term investment horizon. I give FD plus returns at best. I am also listed on the stock exchange in case you want to get rid of me quickly, but because there’s reward for holding me till maturity, I would suggest you don’t let go of me. Watch out for me between January and March every year. That’s when I offer double-indexation benefit.

45-60 seconds

Red flags about me

I do not guarantee any returns, much like any other scheme. However, to protect their reputation, fund houses will do a lot before investing in poorly rated assets. Earlier, I used to indicate the returns at the time of your investment itself. Now, I am not allowed to do so.