At MintGenie, we go a step further in making sure all your personal finance related questions are answered. You have a question, we get it answered. In this series, we take up a question related to your money and ask three financial advisors to give their views. You get four detailed views to help you make an informed choice.
Q. I have a big expense coming up in 18 months. I have the money but I want to keep it safe and earn better than bank saving rate till then. Where should I park my money? An FD or a liquid fund?
Kalpen Parekh, MD & CEO of DSP Mutual Fund, says:
“Mutual funds have a range of debt funds designed for needs arising in different time spans. When I have expenses lined up in the next one to two years, I would choose a fund which invests in debt instruments that mature within these 1 to 2 years. Money market funds invest in such debt instruments and are good investments for an 18-month investment horizon.”
Viral Bhatt, Founder of Money Mantra, says:
“For 18 months you can go for a short-term debt fund as of now. This is because investing in a short-term debt fund gives you liquidity along with tax benefits as post-tax returns will be more than fixed deposits.”
Sridharan Sundaram, Founder and Principal officer of Wealth Ladder Direct, says:
“In the present scenario, interest rates are now moving upward and bond yield are rising too. And someone who wants to protect the capital and wants guaranteed returns should choose fixed deposits (FDs) over liquid funds. However, this is in line with the current scenario. This could change after three to six months."
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