Sunday, July 25, 2010

Saving versus Inflation

With Inflation reaches double figure the saving has become a major problem.Due to impact of Inflation along with taxes the FDs has become very less effective.The return on FDs are approx 7-8%.After tax deduction and Inflation it has eroded the returns.But due to safety factor people continue to invest in FDs.Here are two products thah offer a better post tax return-Fixed maturity plans(FMPs) and capital protection funds(CPFs).
A CPF is a close-ended mutual fund that seeks to protect the capital by investing in quality fixed income instruments maturing in line with the tenure of the scheme and seeking capital appreciation by investing in equity and equity related instruments.
A FMPs are close ended debt funds with a fixed maturity horizon.Both FMPs and CPFs offer inflation-indexation benefits to the investors and lower tax as compared to FDs.So invest in FMPs and CPFs instead of FDs.


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