Reading this thread, I just remember one advertisement from ICICI Bank. If one deposits Rs. 167000.00 under fixed deposit, the interest part Rs. 1000 will go to any MF as per directive of investor per month through SIP route.
After maturity, the fixed deposit amount may remain same like principal amount. That was not mentioned in that advertisement.
My question – how is that plan? Is it okay for a middle class salaried person having 2 dependents?
Dear arinshare, In the plzn discussed by u, the main drawback is - mly. interest earned by u from ur bank FD (which is going to MF as SIP)`ll increase ur tax liability. U w`d have to pay tax on this interest income as per ur marginal rate of tax.
So post tax yield from bank FD `ll be poor, yes a part of that loss `ll be covered by the money invested thru SIP in MF, if market remains favorable to u.
From taxation point of view as well as for safety of ur capital, the same plan can be implemented by investing money in debt fund & transferring dividend amount from debt fund to Eq. fund.
Thanks Ashal for pointing the taxation part on Interest from FD. I did not consider this point. Thanks a lot. So I discard this plan for good.
Right now I am adjusting my previous mistake for commencing money-back LIC policy. After having money from LIC after 5 years interval, I put all those to MF through SIP. How is the current plan? Earlier I used to pay Advance Premium to LIC through this money and used to get 5-7% rebate on LIC Premium.
Dear Arinshare, U r doing a right thing by investing the money back amount of LIC policy in to MFs thru SIP. Just a small correction in this setup. Plz. invest money back amount in liquid/liquid plus funds & invest in ur Eq. funds thru STP. u `ll earn some extra returns.
| NIFTY 
