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Fixed Maturity Plan

Mutual Fund houses have been forcefully pushing these plans to layman financial specialists promising wellbeing of capital and unsurprising returns.

The previous week, Essel Group of organizations (Zee) defaulted on the reimbursement of head on its obligation that had been bought in by numerous FMPs including Kotak MF, HDFC MF, Aditya Birla and ICICI Prudential. According to some reports close to Rs. 1,400 crores of such instruments are in default risk. As an investor how should one avoid such risks.

Invest only in debt issued by the Government of India or even from a pessimistic standpoint AAA appraised blue chip organizations, which structure some portion of the record like Nifty50 or Sensex 30. The distinction in yield between these protections and FMPs are in the tune of 150-200 bps, which isn’t proportionate with the dangers in question. Abstain from getting influenced by “deals talk” of the store houses who will utilize all way of past execution to get you to put resources into them. Thus it is less risky with Tier 1 Banks. Tier 2 Banks & Cooperatives should be avoided.

Invest in hard resources like commercial real estate where the consistency of incomes through lease is coordinated by the capital security managed by the land underneath. A business property won’t fail like an organization. There will consistently be a purchaser for it. Truly, the worth may vacillate and deal may require some serious energy, yet capital isn’t completely in danger.

Source: https://economictimes.indiatimes.com/wealth/invest/mutual-fund-fmps-hit-by-defaults-what-investors-should-know/articleshow/68860744.cms?from=mdr

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