Gone are the days when bank fixed deposits were the only avenues to park your hard earned savings. Today you have a plethora of investment avenues available in the market. You just need to pick up the right one to suit your investment style and risk profile.
MIPs (Monthly Income Plans) are the best alternatives to the traditional FDs. The best rate for a one year FD that you could get in the market (With Nationalised Banks) is max 7-7.5%, whereas you have a plenty of MIPs which are giving returns in excess of 9-10% in the last 5 years. Whats more is the MIP returns do not attract any tax at the hands of the investor. However, your FD interest might attract a tax of upto 30% (depending on what slab does your income fall into).
Basically it is the composition of the MIP portfolios which helps us getting better returns still keeping risk in check. A typical MIP would have a debt proportion of 80% whereas the equity portion to the extent of 20%. The high proportion of debt ensures capital protection and some portion of equity opens opportunities for higher returns.
Having a look at the table below gives a fair idea about how few MIPs have performed over last five years. Although the returns cannot be guaranteed, the market exposure provides some headroom for higher returns. Also, the tax-free nature of investments is an added advantage why MIPs can be flavor of the season.
| Scheme Name |
NAV as on
29th Dec 09 |
Lastsix months
Returns |
LastTwelve months
Returns |
LastThree Years Returns |
LastFive Years Returns |
| Reliance MIP |
19.95 |
11.18% |
22.58% |
12.88% |
13.73% |
| HDFC MIP LT Plan |
20.71 |
9.58% |
31.59% |
12.27% |
13.28% |
| HSBC MIP |
18.2 |
9.27% |
19.45% |
11.33% |
11.27% |
| Canara Robeco MIP |
26.86 |
4.55% |
28.46% |
11.20% |
13.99% |
| Principal MIP Plus |
17.85 |
7.26% |
21.70% |
12.05% |
10.87% |
| DBS Chola MIP |
18.66 |
5.27% |
12.88% |
12.00% |
10.09% |
ICICI Prudential
Income Multiplier Fund |
17.89 |
5.55% |
23.95% |
7.65% |
10.71% |
| |
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Disclaimer : Mutual Funds Investment are subject to Market Risk. Readers are advised to consult their financial advisor and use their own judgement before making investment decisions.
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Hmm, this looks like a very good option for tax saving.
I am considering it very seriously for directing my savings.
Thank you Mr .Bajaj
Thanks for your appreciation Mr. Saurabh. You may find more articles of your interest over here. So please do keep visiting and keep posting your comments on the same.