Safer investment options to build a corpus for home downpayment
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- Nikesh Shetty
It is not a great idea to invest in stocks or equity mutual funds to take care of your short-term financial goals. Since you have a horizon of merely three years, you should park your money in safer options like bank deposits and debt mutual funds. The only advantage of investing in mutual funds is that they have the potential to offer you marginally higher returns and better taxation.
Interest on bank deposits are added to your income and taxed according to the income tax slab applicable to you. Investments in debt mutual funds held over three years, are taxed at 20 per cent with indexation benefit. The indexation helps to inflate the purchase cost and bring down the real rate at which the gains are taxed.
Mutual funds do not guarantee or assure returns. The returns would depend on the performance of the investments made by the scheme and the market conditions.