1. All investments should always have reviewable individual need-based goals and tenure-wise targets.
2. Treat your FDs and Debt funds as investments within your total debt asset allocation and decide as per:-
a) Capital protection: FDs score over Debt funds.
b) Income generation:
i) FD intt - taxed at slab rate after Sec 80TTA/B (within 10000/50000).
ii) Debt fund (incl.liquid) capital gains - taxable at slab rate below 3 years, and at 20% after inflation indexation benefits above 3 years.
c) Growth potential: Debt funds above 3 years score over FDs.
d) Tax-planning: FDs of 5+ years have Sec 80C benefits (within 1.5 lakh).
3. Your contingency fund of 6 months expenses (incl. loan EMIs) should be in flexible FDs and / or liquid funds for emergency use.
4. As a thumb rule, your total debt allocation should be equal to age.
2. Treat your FDs and Debt funds as investments within your total debt asset allocation and decide as per:-
a) Capital protection: FDs score over Debt funds.
b) Income generation:
i) FD intt - taxed at slab rate after Sec 80TTA/B (within 10000/50000).
ii) Debt fund (incl.liquid) capital gains - taxable at slab rate below 3 years, and at 20% after inflation indexation benefits above 3 years.
c) Growth potential: Debt funds above 3 years score over FDs.
d) Tax-planning: FDs of 5+ years have Sec 80C benefits (within 1.5 lakh).
3. Your contingency fund of 6 months expenses (incl. loan EMIs) should be in flexible FDs and / or liquid funds for emergency use.
4. As a thumb rule, your total debt allocation should be equal to age.