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  • Category: Investments

    Which investment instrument will give me better return?

    Have a query about the best investment option? Looking out for advice from financial experts? Here, on this page find responses from experts regarding the best investment options with the goals of time period and risk taking capability.

    My wife and myself are planning to invest a lump-sum amount for our daughter. We want to remain invested for 3 years and planning to use this investment for higher study of our daughter. As the time period is not very long, we are giving importance on safety of the capital along with moderate return.

    In view of the goal, time-period and risk-taking capability as mentioned above, I would like to know whether we should perk the investment in Sovereign Gold Bold (currently available) or in Long-term debt income fund?

    Which instrument would give better return in three years? Knowledgeable Members may kindly explain with comparative figures.
  • Answers

    5 Answers found.
  • Out of the two which you have mentioned I will prefer the debt instrument (throgh MF) which may give you a return in the range of 6-9%.

    The gold is a precious commodity but it's movements are unpredictable. If you see its historic movement then you will find that for quite some time it is hovering in the range of 28000 to 30000 per 10 gr. It is very difficult to speculate about it. Hence the gold bonds which are also based on the value of gold in the market are also unpredictable. Only thing is you will get 2.5% taxable interest (no TDS) on these bonds which is quite small.

    Apart from this there are other options like balance MF, bank FD, FMP schemes of MF (generally of 3 yrs plus duration) etc where you can consider to park the money.

    Knowledge is power.

  • From the penultimate para in you question, it seems that you had already shortlisted your choice to the two alternatives-Sovereign Gold Bold (currently available) or in Long-term debt income fund. If you ask for the one of the two, I would suggest Gold Bond because of the small time frame.

    But if you ask for some open suggestions then I would give the following choice in the same order of priority based on ascending risk of capital.
    1. Bank deposits- Distribute the amount among a few banks including nationalised banks, New generation private sector banks and state/dist co-operative banks which pay slightly higher rate of interest.
    2. Physical Gold
    3. Sovereign Gold Bond
    4.Debt Funds
    Depending on your own risk taking capacity,and the quantum of investment, you can arrange to distribute among the above also to spread the risk.

  • General Gold prices go up when the market is in turmoil and comes down when the market is very stable and growing well.
    You can split your investments into
    Gold bonds
    Low-risk mutual funds, While balanced Mutual funds, are good, choosing one that has performed relatively better in a bear market would be a good choice.
    A part of it in a bank FD in your wife's name.
    If all goes very well, you'll get a decent return. One suggestion would be to encash the Gold bonds and Mutual funds a few months ahead of your needs when the market is good because, if by chance the market crashes when you need it, you would be losing out.At least your FD part would be safe.

  • For keeping the funds for 3 years I think the best will be the MF route as markets are in good condition and likely to move ahead in near future. The choice of debt funds is better as the risk is lower. However one can try balanced funds also where debt and equity both are taken in consideration.
    Another option is keep in short term bank deposits as banks are giving maximum interest (6-7%) in 1-3 years FDs.
    Regarding gold it is really difficult to foresee the future trend so I will not advise it in any form.

    Thoughts exchanged is knowledge gained.

  • I'd say if you want to invest into education. You should not invest into bonds. You should invest into index funds or equity or debt funds. You can get into hybrid funds or index funds.

    As the returns for them are much better compared to the bonds. Also even if you choose equity it won't be much risky. But I'd recommend 5 year for equity. And for the 3 year duration the index funds or the debit funds sounds reasonable.

    You can take a look at the fundsindia or the scripbox for the fund finder options. And from there you can directly go with the investment from fund house if you want. You should avoid FD, Gold and any other govt savings schemes for this target.

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