Fixed maturity plans, or FMPs as they are popularly called, are close-ended funds with a fixed tenure and invest in a portfolio of debt products whose maturity coincides with the maturity of the product.
The primary objective of an FMP is to generate income while protecting the capital by investing in a portfolio of debt and money market securities. The tenure can be of different maturities, ranging from one month to five years. FMPs are effectively like bank fixed deposits, but one that has a lower tax incidence. This entails a good difference in net maturity value.
The advantage of investing in FMPs is that they have less risk of capital loss than equity funds due to their investment in debt and money market instruments. Apart from this, FMPs are not affected much by interest rate volatility when held till maturity. The return on these funds is indicated and is close to the actual returns. If you are not a risk-free investor and look for an assured income, this is the right option for you.
Invest Rs.2000 per month and make your child a crorepati
Tuesday, July 1, 2008
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment