I have a joint fixed deposit (FD) with my father, the main account holder, at a PSU bank. FD has been on his behalf to benefit from the additional interest provided to elderly citizens. After my father passed recently, the bank said that the FD had to close because it is a senior citizen FD and could not continue to be in my name. The FD will mature in 2025. The bank said I can create a new FD, but the prevailing interest rate will apply. What is the best option for me now?
– Names are withheld upon request
We are sorry to hear of your father’s death. Target maturity debt index funds may be the most appropriate alternative for you to consider as an alternative to bank deposits, as yields can be locked in through the use of these programs and they are also very affordable. tax efficiency due to the long-term capital gains index benefits.
Ideally, debt index funds with these target maturities should be kept to maturity, so that the volatility in interest rates currently seen, due to high inflation, can be minimized. You might consider a target-maturity debt plan with exposure to pure government securities, or a combination of government securities and public sector bonds, in this category.
In 13 months my sister is getting married. All members of my family, myself included, wanted to attend the wedding ceremony. What kind of instrument would you recommend that we deposit money in so we can get it back in 13 months with some interest or appreciation?
Due to our different work profiles (we just started working and some of us are working in startups and some in government work) and we were able to save some monthly limit.
– Names are withheld upon request
Considering that you have a short-term holding period, it is important to stay away from investments in volatile assets such as equity.
We recommend combining ultra-short funds with the high credit quality of the underlying bond and arbitrage funds for this purpose. Essentially, arbitrage funds take advantage of the difference between the cash and futures markets and run a completely hedged portfolio.
These funds also have the tax differential of traditional fixed-income instruments, as they are taxed like equity at a 10% long-term capital gains tax rate if held for more than 12 months.
Vishal Dhawan is a certified financial planner and founder of Plan Ahead Wealth Advisors, a SEBI registered investment advisory firm.
