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| Invest in recurring deposits for better returns and liquidity |
| BS Research / Mumbai May 10, 2009, 00:57 IST |
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I want to invest Rs 40,000 for a short period. I would need the money in 6-8 months. Can you suggest an investment avenue that can give me best returns and also offer liquidity? I have ruled out a fixed deposit as I may need to break it and end up paying a penalty.
- Sachin Kangutkar
The answer depends on when you need the money. If you will need it only after a particular period, then you can invest in a bank fixed deposit (FD). This way, you can opt for the preferred time frame and you will not face a penalty on a premature withdrawal. The best part about bank FD is that you will get guaranteed returns. Also, they are the safest.
But if you are vague and cannot ascertain the time frame, then it is better to opt for a liquid fund. This category is reasonably safe. Redemption in a liquid fund takes T+1 days. This means the money is credited to you on the day after you make your redemption request.
However, if you also want to keep this money for emergency purposes and would need it instantly, you can keep it in a recurring deposit. You can have instant access to it whenever the need may arise.
I have been systematically investing in Magnum Taxgain since June 2006. And in the first year, I invested in the dividend re-investment option. But from May 2007, I started investing in the growth option. When can I withdraw the total money?
-Joya
Each investment through a systematic investment plan (SIP) is considered as a fresh purchase in the fund. Each instalment in a tax-saving fund, hence, needs to complete three years of holding, which is the compulsory lock-in period.
If you started your SIPs in this fund in June 2006, it does not mean that your lock-in period will get over in June 2009 and that you can withdraw your total investment. Yes, the first SIP will complete its lock-in period in June 2009. But the units bought in the next month, that is July 2006, can be redeemed only in July 2009, and so on.
SIPs with a dividend reinvestment option in the first year will also have to be compulsorily locked-in for three years. A change of plan does not change their lock-in status. Since you were investing in the dividend re-investment option in the first year, it must be noted that the compulsory lock-in period of three years is also applicable to the dividends reinvested.
I have held units in the ABN AMRO Opportunities Fund since four years. I used to track its net asset value (NAV) till a few months ago, and even used to receive regular statements each quarter from ABN AMRO. Of late, I am unable to find details on it ? Can you tell me on where I should look for the NAV of this fund and how do I redeem it?
-Amarjeet Singh
The global restructuring of the ABN AMRO group in October 2008 led to ABN AMRO Asset Management becoming a part of Fortis Investment Management. Due to this, there was an indirect change in the control of ABN AMRO Asset Management (India) and the company has since then been renamed as Fortis Investment Management (India).
Following this, the existing schemes of ABN AMRO were renamed and the fund you invested in - ABN AMRO Opportunities - is now called Fortis Opportunities. As for redeeming the fund, you can do so with the Fortis Investment Management.
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