Fixed Maturity Plan
Fixed maturity plans close-ended debt funds and hence, they are not available for continuous subscription. Investments are made in debt instruments such as deposit certificates, corporate bonds, bank FD, money market tools. A fixed maturity plan's most influential aim is to provide the investor with a steady income over a set period of time. The investor is free from the fluctuations of the market and lets the investor gain a steady income due to its fixed lock in time or near ending. The rate of return from the best fixed maturity plan against the volatility of interest rates is stable and tax-efficient.
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List of Best Fixed Maturity Plans 2019:
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1.Tata Fixed Maturity Plan:
The scheme aims to generate income and/or capital appreciation by investing in fixed income instruments having maturity in line with the maturity of the scheme. Tata Fixed maturity Plans are considered to be the one of the best fixed maturity plans to invest in.
2. SBI Fixed Maturity Plan (FMP) - Series 24:
The close-ended scheme seeks to provide regular income and capital growth with limited interest rate risk to the investors through investments in a portfolio comprising of debt instruments such as Government Securities, PSU & Corporate Bonds and Money Market Instruments maturing on or before the maturity of the Scheme.
Our Mutual Funds Recommendation
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Fixed Maturity Plan FAQs
+What are Fixed Maturity Plans in Mutual Funds?
Fixed maturity plans are a kind of debt fund where the duration of the investment portfolio is closely aligned to the maturity of the scheme. These generally closed ended debt oriented funds.
+Who should invest in a Fixed Maturity Plan?
Debt funds are ideal for investors who want regular income, but are risk-averse. Debt funds are less volatile and, hence, are less risky than equity funds. If you have been saving in traditional fixed income products like Term Deposits, and looking for steady returns with low volatility, debt mutual funds could be a better option, as they help you achieve your financial goals in a more tax efficient manner and therefore earn better returns.
+How Fixed Maturity Plans are different from other Mutual Fund schemes?
In terms of operation, fixed maturity plans are not entirely different from other mutual fund schemes. However, in terms of safety, they score higher than equity mutual funds. For instance, when the market falls, the NAVs of your equity funds fall sharply, whereas in case of fixed maturity plans, the fall is not as sharp. Having said that, fixed maturity plans can offer only moderate returns, while equity funds, which are highly risky, offer high returns over longer time horizon.
+What is the tax implication on Fixed Maturity Plans?
FMPs are close ended debt oriented funds. If the investment holding period is more than 3 years, it is considered as long term investment and if investment holding period is less than 3 years, it is considered as sort term investment. Long-term capital gains on debt fund are taxable at the rate of 20% after indexation. Indexation is a method which involves factoring the rise in inflation from the time of purchase to sale of the units. Long-term capital gains on debt fund are taxable as per the income tax individual slab rates.