Saturday, September 11, 2010

WHY INVEST IN FIXED MATURTY PLANS (FMPs)?

WHY INVEST IN FIXED MATURTY PLANS (FMPs)?
1.most of investors like to invest in FMPs because they think FMP are good alternate of fixed deposits
2. FMPs are schemes that invest in fixed income instruments, like, commercial papers, money market instruments, corporate bonds, debentures of company’s certificate of deposits or securities issued by government of India and fixed deposits.
3. The basic objective of a FMP is to generate steady 6-8 % returns over a fixed period. So investors are assured of returns if they stay invested in these products till maturity.
4. FMPs have lower risk of capital loss due to their investment in debt and money market instruments.
5. FMPs are also listed on the stock exchanges and can be sold prior to maturity as well. However, liquidity of these schemes could pose a problem while trying to exit before maturity.
6. FMP give only 6-8 % return and there return is taxable also so I think it is much better to hold cash in saving accounts and avoid FMP because if you hold cash in saving accounts then you got 3.5 % interest with full liquidity so I do not like to invest in FMP.
Post a Comment

Matched Content

Google+ Followers