My mother had invested all her savings and surplus earnings in various equity and debt instruments for around 8-10 years. But she closed all those and shifted the entire maturity proceeds to Term Deposits in various banks, for some 7-8 years ago. She stayed with us since last 3-4 years and expired 3-4 months ago, leaving an hefty amount invested in Bank Term Deposits. All these were in our joint names.
My mother had not filed IT Returns, which we filed for last 3 years, before her death. Our tax consultant advised me to shift some of the Term Deposit amounts to Mutual funds in order to reduce the tax burden arising out of interest income.
Since I am a housewife, my income was negligible all these years. But since my mother’s interest income will come to my name now, I’ll have to file returns in future.
We have decided to redeem some of the term deposits during FY 2018-19 and invest the proceeds in MFs. For this, we have decided and formed a few pairs of schemes – a debt fund and an equity fund from same AMC. We have invested a lump sum amount (say 200000) in a debt scheme (for parking the money temporarily) and started a STP to transfer (say 10000) some amount to an equity scheme of that same AMC.
In your blogs, you alway advise to decide a financial goal and then invest accordingly. This is an excellent advice for young / middle aged people. But in my above said case, we are a couple of around 57 and 60 years and our goal is only retirement planning (since our children’s education, marriage and such other major expenses are over) now!
We will reduce our Bank Term deposit total in such manner that the interest earned during the FY remains below taxable limits and shift this amount to MFs and lock it for say more than 5 years.
Is the above method of investment correct?
Thanks and Regards,
Whether your CA is MF adviser (I feel so)? Also, never invest for the sake of SAVING TAX ALONE. You must look into tax saving options, but it must be your MAJOR idea of investing.
Now, regarding investment, yes never invest without knowing how long you want to keep the money. More than 5 years is just a wild guess. Be specific for how long you can keep it (after keeping emergency corpus set aside and have proper health insurance for both of you).
Once you identify the time horizon, then the first priority should be to do the asset allocation between debt and equity. After that choose the products.
Also, for your information STP, SWP and SIPs are the best ways created my Mutual Fund companies and advisers to garner your money and earn the cosntant stream of income for them. Think wisely and invest.