The first thing to consider before investing is your financial goal. The next is the time horizon and risk appetite. If the goal is 1-2 years away, liquid/short-term funds/fixed-maturity plans (FMPs) are advisable. FMPs are not liquid, but give better return. For more than two years, you can invest in monthly income plans (MIPs) or debt funds. In MIPs, the debt category exposure is more than 65%. Debt funds with longer duration have more volatility and provide capital appreciation in case of declining interest rate scenario and vice versa. In the current interest rate scenario, debt funds can yield between 8% and 10% return, excluding the volatility factor.
Do I have to pay capital gains on gold exchange-traded funds
Gold ETFs attract capital gains tax. Holding period of one year or more is treated as long term. Short-term capital gain is taxed at the normal rate and long-term capital gain at 10% without indexation and 20% with indexation.
I have a recurring deposit that matures next month. Will the bank deduct tax at source (TDS) on the interest part
Some banks do not deduct TDS on RD interest. However, RD interest is not tax-exempt.
I want to invest in a child unit-linked plan for my son for his higher education. Kindly advise.
When you want to buy any financial product, you must ask why you want to buy it The factors to look at are return, tax and protection. Traditional child plans offer lower returns and Ulip child plans have market risk. If you want investment return, then first look at your goal horizon and risk appetite. If the goal is 10 years or more, you can opt for diversified equity MF or Ulips. If the goal is shorter, say five years or less, you can opt for debt MF schemes. If you are looking from the tax angle and the child is newly born, you can start with a Public Provident Fund account. However, always take adequate insurance covering the education expenses of your child through term plans or otherwise.
Will a health insurance cover critical illness or should I go for a separate cover
Health insurance with indemnity features is different from critical illness cover. If you are aiming at reimbursement of medical expenses on hospitalisation, you should take a health insurance policy from a general insurance company. This may be an individual or family floater policy.
Should I wait for the new products till January to take a new life cover for my wife
Life insurance companies will launch new products in the traditional category from January. Other products continue as such. In the traditional category, there are some customer friendly features such as better surrender value, higher insurance cover etc but comes with a cost. You need to make an insurance need-analysis for your wife and determine how much insurance cover is required for her. Then, you can look at options available.
* The writer is founder & chief financial planner, Max Secure Financial Planners, and a Sebi-registered investment adviser
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