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The Morgan Stanley Growth fund that you had invested in 1994 has seen a substantial appreciation in value. Until 3 years back, this was a closed-end fund that could be bought and sold like a share. It is now an open-end fund. We estimate that your money would have risen in value by now

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Canara Robeco new fund - Canara Robeco Gold Savings Fund

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 04 Apr 2012 03:40 AM PDT

Canara Robeco new fund - Canara Robeco Gold Savings Fund

Canara Robeco Mutual Fund has filed offer document with Sebi to launch Canara Robeco Gold Savings Fund, an open-ended fund of funds scheme. The NFO price is Rs 10 per unit.

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Tata Mutual Fund - Change in Fund Manager - Tata Growth, Tata Equity Management and Tata Young Citizens Fund

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 04 Apr 2012 03:05 AM PDT

Tata Mutual Fund has announced a change in the fund manager of Tata Growth, Tata Equity Management & Tata Young Citizens' Fund, with effect from April 2, 2012.

Now, Mr. Amish Munshi will be the fund manager of Tata Young Citizens' Fund (only equity portion). While, Mr. Atul Bhole will manage Tata Growth & Tata Equity Management.

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Consolidated Account Statement ( CAS ) for mutual fund investors

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 04 Apr 2012 02:44 AM PDT

MUTUAL fund investors often face a lot of problems related to record-keeping and tracking investments.

When it comes being aware of the details about investments, often, the investor does not know the latest position of his investments.

This happens because investors do not get regular updates, so they are not able to act with full confidence.

Now, with a view to ensure that this problem is addressed, there are new guidelines for mutual funds that would help investors.

Consolidated account statement (CAS): All investments in a mutual fund will be reflected in the account statement issued by the mutual fund house.

The consolidated statement lists all the required information on investments in the mutual fund.

The statement includes the amount invested, number of units held and the net asset value (NAV) at which the investment was made, to name a few. The statement also has the folio number of the investor, along with the address and details about the know your customer (KYC) requirements and PAN card information.

With an increase in the number of investments, there is duplication of effort, if there are separate account statements given for each investment. A CAS, which is provided by the mutual fund, reflects all the holdings within that particular fund. It, thus, enables the investor to have an overview of multiple investments that are covered by the CAS.

Monthly CAS: An important thing that the investor will experience is that they will now get a monthly CAS, whenever there is a transaction in the mutual fund. The mutual fund has the responsibility to ensure that the CAS is generated at the end of each month and sent to the investor.

This will enable the investor to get a complete view of the position of investments and the manner in which they are performing and then help him take some further action, if required, in time.

Earlier, mutual funds used to provide an account statement on a quarterly basis, whenever there was a transaction but, now, these statements will be sent more frequently so that the investor is also able to track his investments. In addition, after every transaction, the investor will have to be intimated about the basic details of the investment by email or SMS within five working days.

Additional measurers: Mutual funds usually do not give any account statement to the investor when there are no transactions during the year. In such a situation, the investor has no clue about his investments.

Now, several mutual funds are also saying that they will provide such an account statement on a half-yearly basis ending September and March. This is a positive step, so that even when

there are no transactions, the investor can keep track of his investments after a short period of time.

Electronic communication: The most vital part of the entire system is that there will be extensive reliance on electronic communication, so, even though, it might seem that there is a higher compliance requirement for the mutual fund, this requirement might actually be more cost and time-effective over the long run.

The individual investor can ensure that the communication is received quickly and efficiently by providing an email address to the mutual fund. This will enable investors to get all the information quickly and in a timely manner

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Peerless Short Term Fund

Posted: 04 Apr 2012 01:34 AM PDT

IN THE past one year, short term debt funds was a rare category of funds that was not only in the black but also, perhaps, gave the mutual fund industry highest returns, on an average.

Peerless Short Term Fund (PSTF) that outshone every thing else in the short term debt fund with its one year return of 12.75 per cent. The next best performer was UTI Short Term Income Fund with a 9.87 per cent return.

PSTF is a relatively new entrant among short term funds with its launch in August 2010 and yet in a period of about 16 months it has managed to outperform other veteran short term funds. Says its fund manager, Ganti Murthy: "A lot of churning of portfolios was required to be undertaken in this fund due to significant inflows and outflows.
We took a lot of positions in the commercial papers market where the rates being offered by three to six month CPs were as high as 11.5-12.5 per cent."

A look at the recent and past holdings of PSTF reveals relatively higher exposure to CPs and a very short term maturity profile of the total portfolio. The high returns it fetched indicated a higher risk was perhaps carried by the fund in its strategy.

As on October 31, the fund's portfolio's modified duration (a measure of interest rate risk where higher the duration, higher the interest rate risk and vice versa) was as low as 0.14 years, and the average maturity of its portfolio was also very low, just 59 days.

This made PSTM perform like an ultra-short term fund but clearly the strategy rly the strategy has paid off.

The fund had a 51.48 per cent exposure to CPs of five CPs of five companies -Indiabulls Housing Finance (15.54 per cent exposure), Karvy Stock Broking (12.95 per cent), Religare Finvest (12.85 per cent), Indiabulls Financial Services (7.81 per cent) and Mannapuram Finance (2.33 per cent). Another 46.42 per cent exposure was in certifi cates of deposits of four banks, with Central Bank of India and Ratnakar Bank accounting for the most.

A year ago, the fund had even shorter duration exposures. At the end of November last year, PSTM's portfolio had a modified duration of 0.07 years with an average maturity of just 26 days. At that time, the fund had a 63 per cent exposure to CPs of eight companies with 10.29 per cent exposure to JK Lakshmi Cement, and a exposure of between 8 per cent and 9 per cent each in Karvy Financial Services, JM Financial Services, Muthoot Fincorp, Manappuram General Finance and Leasing, and Amalgam Bean Coffee Trading Company.

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Investment - Safety and Return

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 04 Apr 2012 12:44 AM PDT

Bank fixed deposits offer assured returns but are entirely taxable. Ultra short-term debt funds can't specify returns but are tax efficient

The global economic downturn coupled with stubborn domestic inflation has depressed the stock market for a while now. So, investors have turned to fixed income avenues in a bid to safeguard capital and earn a return that would at least cover inflation. Bank fixed deposits (FDs) have been popular for this. Ultra short term mutual funds (MFs) have been another favoured option. Besides, this product is more liquid and tax-efficient than FDs.

While it is possible for investors to avail of high interest rates for little or no risk at all, the choice of fund is important. The average one-year return on most income schemes is around 6.5 - 7 per cent. This is because existing income schemes are saddled with paper already invested in the past at lower rates. When the rates start climbing, existing low-yield papers are sold at a discount, thereby lowering the Net Asset Value (NAV) and the return on investment.

Interest rates and prices of fixed income instruments share an inverse relationship. In other words, when the overall interest rates in the economy rise, bond prices fall and vice versa. This is called the interest rate risk, and adjusting the portfolio to the market rate of returns is 'marking to market'.

To illustrate, assume the current NAV of the MF is ~10 and its corpus is ~1,000 crore. Let's say the interest rate rises from eight to ten per cent. Immediately thereafter, you wish to invest ~1 lakh in the scheme. Realise that the entire corpus of the fund stands invested at an average return of eight per cent. If the fund sells the units to you at it's current NAV of ~10, you will be allotted 10,000 units. This will not be a good deal for you. The return on your money that will be invested at 10 per cent will be shared by all other investors, too.

This is unfair to you. Therefore, something has got to be done by the fund to protect your interest. Here comes the 'mark to market' concept. In simple terms, the fund lowers its NAV to ~8. You will be allotted 12,500 units and not 10,000. The return on 12,500 units at an NAV of ~8 would be the same as that of 10,000 units at ~10.

In other words, interest rates and prices of fixed income instruments move in opposite directions –the NAV falls when the interest rates rise and vice versa. Or when interest rates rise, the value of long term debt gets diluted.

There are two ways to get out of this trap. Possibly, by holding the investments till maturity. Interest rate risk only comes into play when a transaction is undertaken during the currency of the fixed income instrument. Ergo, it follows that if the investment is held till maturity, there would be no interest rate risk.

Which is why, for investments such as FDs, relief bonds etc, there is no interest rate risk, as these investments are normally held till maturity. Fixed Maturity Plans (FMPs) are another example where the MFs invest in underlying securities where the balance maturity period is the same as the tenure of the FMP, thereby eliminating the interest rate risk.

The other way out is by investing in the above mentioned ultra short-term plans of MFs, where there is minimum fluctuation in interest rates and hence, little or no interest rate risk. These funds invest in debt paper having a short maturity, generally between 6 - 18 months. This covers instruments such as commercial paper, certificates of deposit, other money market instruments and bonds with short maturity.

These funds score over the FDs on the risk-return, liquidity and tax efficiency parameters. The annual FD returns of 9.5 per cent is fully taxable. At a 30 per cent tax rate, the return plummets to 6.65 per cent. On the other hand, an ultra short-term fund, being a non-equity scheme, tax at 10 per cent would be applicable across slabs. This tax arbitrage jacks up the effective rate of the instrument and, hence, the MF plan scores FDs.

The only major concern investors could have is that the category average returns of ultra short term funds over the past year have been around 8.5 per cent, lower than those from FDs. However, comparing the historical return of one instrument against the future return of another is incorrect and can lead to suboptimal decision making. In other words, an FD and an ultra short term fund may be similar in substance but they differ in form. FDs specify the rate offered for the future. However, MFs aren't allowed to guarantee or specify returns. Instead, investors would get the return that the underlying portfolio earns after expenses. Here, the investors try to gauge the fund's worth based on past performance. But, this may be an effective tool to compare equity oriented funds. For debt funds, in a constant and dynamic interest rate scenario, it would throw up an erroneous conclusion.

Interest rates seem to have peaked and going ahead, yields should stabilise. The Reserve Bank of India is not expected to carry out further rate hikes, as it can adversely affect growth. Therefore, if you're looking to diversify your portfolio by adding a dollop of debt investments, ultra short-term income funds could be a wise choice.

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Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Debt fund options

Posted: 04 Apr 2012 12:01 AM PDT

THERE are different kinds of variations in debt-oriented funds that are now available for investment in the market. This is a good thing for investors because it provides them with a choice that is far greater than what they were experiencing earlier.

Investors are also able to structure their portfolio effectively by getting the desired exposure in different type of debt instruments through these mutual fund options.

Initial variations: There are several variations that are visible in terms of the instruments that the debt funds use while constructing a portfolio.

This will include instruments like government securities, certificates of deposit, corporate paper and even short-term instruments.

The proportion of these instruments in the portfolio gives a different flavour to the entire portfolio and, hence, this needs to be considered in conjunction with the requirements of the investor when the actual decision about an investment is being made. These are general variations and, hence, provide an overview of the choice of instruments that are present.

In recent times, there are even more options that are being offered and these allow a different kind of exposure. Here, are a couple of such instruments and the knowledge about these investment avenues will help the investor get more out of their debt funds.

Ten-year government securities: There are several instruments that are extremely popular in the debt markets. One of them is the 10-year government securities that are actually used as the benchmark for knowing the yield in the economy. This makes the securities a very liquid instrument and, hence, there is a large amount of liquidity as well as trading that actually takes place.

This makes it a popular choice when it comes to selection in the portfolio of several mutual funds, but often, this might not match the strategy followed by the fund. Now, with a specific fund that is dedicated for this kind of instrument, the choice for the investors increases.

Investors need to know that there will be active management when it comes to this particular security because the 10-year instrument keeps changing at regular intervals as the time period changes. This will require migration to the new 10-year benchmark, which the fund manager will actually take care of.

Investors who want to ensure that they have an exposure to a liquid instrument should be looking at this kind of exposure in their debt portfolio, however, in order to manage their risk, the total exposure should be limited.

Corporate bonds: Another area that is fast developing in the Indian market is the corporate bond space, where there are more and more companies that need financing and they are turning towards the bond market to meet requirements.

The end result of this situation is that there are a lot of bond issues that are being offered in the market and, hence, there is an opportunity for different kinds of investors to earn from these issues.

Earlier, retail investors had limited exposure to such instruments, but, with a separate fund that will concentrate just on this particular instrument and not much more, and hence, this investment avenue will give a specialised exposure when required. At the same time, investors should also look carefully at the exposure to corporate bonds within a normal debt fund to gauge the actual position. On the other hand there is a specific risk with this kind of investment and the investor will have to check the credit rating of the company when they are evaluating the portfolio. These instruments are meant for only those investors who have the ability to take a higher amount of risk that will come with the instrument.

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Loan against insurance a good option

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 11:09 PM PDT

Avail loans up to 85% of policy surrender value at cheaper rate Benefits of an insurance policy such as life cover will continue uninterrupted

DID you know that if you are in need of urgent cash, you could take a loan against your insurance policy? Like any loan, you will have to pay regular interest, but the rate would be much lower than those on personal loans, credit card borrowings or loans against gold.
Types of loans: You could get a loan against savings and investment policies, both traditional and unit-linked insurance policies (Ulips) of up to 85 per cent of the surrender value of the policies.

However, insurance companies do not issue loans against term insurance or pure life insurance policies because there are no savings component. In a term plan, premium is charged only against the risks.

Eligibility for these loans: In most cases, one is eligible for a loan only after renewing the policy for three years. Interest charged on loans against insurance policies vary from company to company. At present, most companies charge half-yearly interest of 9 per cent.

A policyholder needs to pay interest along with the regular premium payments.
Conditions: In case you have opted for a loan against an insurance policy, insurance policy benefits, such as life cover will continue uninterrupted.

Get in touch with your insurance company to know if a loan facility is available on your insurance policy. Some insurance companies may not allow a loan on certain insurance schemes, especially for Ulips, where the corpus is invested in equities. Equities are volatile and one cannot be sure about the future value of policies. Fund value may drop substantially if the market tanks. In such cases, the fund value could be lower than the loan value.

If an insurance company provides a loan against Ulips and in the future, the market value of the insurance policy falls and it is lower than the loan, in such cases, the insurance contract is cancelled. In order to raise funds, one can also surrender the insurance policy and avail the surrender value, but it is better to avail a loan against an insurance policy than to terminate the policy.

Loans against an insurance policy will ensure that you can continue to enjoy life insurance coverage.

In the event of the policyholder's demise, the benefits will be paid to your dependents after settling the outstanding loan amount.

If you fail to pay the interest on time, that will be added to the principal and the applicable interest would be calculated.

If the policy matures before paying off the loan, the insurer has the right to deduct the loan amount from your maturity amount.

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Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Principal Large Cap

Posted: 03 Apr 2012 10:25 PM PDT

Having done exceedingly well in the post-meltdown period, Principal Large Cap has succumbed to market volatilities this year. It would, however, be unwise to exit the scheme on the basis of a short-term performance hiccup

Its past performance so far reveals that Principal Large Cap has outperformed the markets brilliantly during rallies, but it has stagnated during downturns. The current financial year has been a particularly disappointing one for the scheme as its investment calls of being overweight on metals and underweight on software have backfired. Despite the current volatile conditions, Principal Large Cap has abstained from taking heavy cash calls and stands by its conviction of not going overly defensive. A similar strategy adopted in the meltdown period of 2008 did help in the scheme in the following year. This strategy, however, is like a double edged sword. It can hurt deeply in the near term if the markets are to deteriorate further but can also enrich investors if markets are to head north hereon.

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Your financial well being

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 08:53 PM PDT

EVERYONE wants to be financial well off. We all aspire for better homes, cars and vacations. But are these signs of your financial health? You should not confuse owning a great car with a person's financial health. He may have bought the car on a loan and this is not a sign of being financially free.

So what is the meaning of financial health? Well, we can judge a person's financial health with the following parameters: Loans-the lesser, the better: In today's world, the mantra of the generation is `buy now, pay later'. Well, this is to your financial health, what eating donuts regularly is to your physical health. Loans are not bad per se, but having too many debts creates havoc not only with your net worth but also with your cash flow. This is because servicing that debt makes you save less, and when the equated monthly instalments (EMI) grow too big, you end up in the worst case scenario of a debt trap.
You need more loans to pay off older loans. It becomes a never ending circle.

Have more investment assets: Your assets are of two types, namely, personal, which includes your residential home, car, family jewellery and investments assets, which include your stocks, bonds and investment property. Many people believe their biggest investment is their home. They feel that's a great thing.

Yes, having a fully-owned house, without any loans on it, is a great thing, but it's not an investment. You use it only for your personal purposes. There is no income accrued from it, nor can you book any profits from it without thinking of first purchasing another home.

We are not saying that it is wrong to buy a home, what we are advising is that your investment assets should form a bigger chunk of you total assets pie. Stocks, bonds, additional investment in property, to name a few, will yield regular income as well as capital gains. In a worst case scenario, you can dispose them without affecting your own lifestyle. Can you do that with your home? Thus, it is advised that instead of going for bigger homes, buy a home that suits your budget, and invest more of your savings in investment assets.

Savings is the key: We have two people, A and B. A is earning Rs 2,00,000 per month and B is earning Rs 50,000 per month.

Generally everyone will feel that A is more financially healthy, but on further enquiry we see that A is spending Rs 1,95,000 per month on his living expenses. The bulk of these expenses are for maintaining his high standard of living. B, on the other hand, is spending only Rs 25,000 per month. Though A's income is more, his savings are much lower than B.
B is investing his savings well and will soon be more wealthy than A. It is not your income that determines your financial net worth but your savings.

Have a financial cushion: When you have bad back, you always want that extra cushion. Even the healthiest among us, sometimes fall ill and need that extra care.
The same applies to your financial health.

For moments like losing a job or medical emergency, you need to keep some funds as contingency. Ideally, you should keep three to six months expenses in a liquid avenue for such an emergency. Also, you should have the adequate insurance cover for life, health or property, if the same is needed.

Secure life goals: We have many people who have good amount of assets and feel they are financially secure. They do not realise that these assets may have to be used for their life goals such as retirement, child's education or wedding. For example, a person may have investments worth Rs 50,00,000 and might feel he doesn't need to do anything more, but he doesn't realise that his retirement corpus requirement is Rs 75,00,000 and his daughter's wedding will cost Rs 10,00,000. This means he will utilise his investments fully and still fall short.

What will he do then? Compare your investments with the funds required for your life goals. If there is a surplus, you are financially free.

With these points in mind, go ahead and take you own financial health check up. If any of you are strong on all points, congratulations! If not, do work on the same.

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DLF Pramerica Wealth Premier

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 07:48 PM PDT

Wealth Premier from DLF Pramerica is a unit linked endowment insurance plan that gives both sum assured and the fund value to the beneficiary in the unfortunate event of the death of the policyholder. Alternatively, the fund value is paid out on maturity of policy. The scheme also allows to extend the investment period by a maximum duration of five years after maturity to take advantage of market conditions.

Even as DLF Pramerica offers both insurance cover and market-linked investment returns under a single product, we believe that a pure term plan for life insurance and investment in equity mutual funds for market gains would be a better option, both in terms of returns and cost

Unique Feature

The policy term can be 15 to 25 years, but premiums are payable for five years. The sum assured ranges between 10 to 50 times the annual premium, depending on policy term and policyholder's age. Higher cover means higher mortality charges

For Existing Customers

Given the high premium allocation charges in the earlier years, those already invested should continue to stay invested as an early exit would imply loss of capital. Also, IRDA regulations forbid investors from exiting any unit-linked scheme before the completion of five years

For Those Looking to Invest

The scheme offers all the features that an investor could expect from a ULIP. But we feel the policy administration charges are on a higher side although capped at Rs 500 per month. Its investment funds have performed at par with the broader market and is probably the reason for anyone looking to invest in this scheme

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FMPs best bet in high interest rate scenario

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 10:11 AM PDT

INTEREST rates are high, equity markets are volatile: So where do you invest? Fixed maturity plans (FMPs) could be one of the answers. The past one year has seen a large number of FMP launches across various maturities, ranging from 90 days to three years.

FMPs have seen interest from both retail and institutional class of investors.

Definitely, rising interest rates could be one of the key reasons for the popularity of FMPs among investors.

Over the past two years, CD (certificate of deposit) rates have risen by 400-500 basis points (bps) or more. Similarly, corporate bond yields have also risen by 100-200 bps or more. Short-term CDs, CPs (commercial paper issued by companies) and corporate bonds are the preferred debt investments of fund managers of FMPs.

One needs to only take a look at the portfolios of FMPs of various fund houses that are published on their websites.

What has been the reason for the rise in interest rates? High inflation, rates hikes by the Reserve Bank of India (RBI), tight banking system liquidity and government's high borrowing in this and last financial year. RBI has hiked rates by 13 times since October 2009. In the most recent RBI policy review announced on October 25, RBI has indicated that they may be nearing the end of the rate tightening cycle.

Thus, we may see short term rates peaking off in the near future. Accordingly, it could be an opportune time to lock investments in this high interest rate scenario by investing in FMPs.

The question then why not traditional investment options, which are also offering high interest rates, or other debt schemes like gilt and income funds. As far as those traditional options are concerned, the main benefit for a tax-paying investor, especially, if she/he falls in the higher tax bracket, is the lower tax rate on FMPs, which makes post tax returns far higher for comparable tenure FMPs. FMP returns are market-linked and you may take advantage of higher rates, however, traditional products rates move with a lag, so, even if market rates move up, it does not necessarily mean those products rates would also move up. However, traditional investment products do give certainty of returns as the rate of return is known. In case of FMPs, the actual returns are not known, however, in consultation with one's financial adviser, who may be aware of the market movements, one can get a good idea of the range of returns that can be expected as fund managers invest in debt instruments maturing in line with the maturity of the FMP. FMPs, thus, carry very low interest rate risk (risk of adverse mark-to-market movement), and this is one of the advantages that they have over duration funds like gilt funds and income funds, which can be more risky.

FMPs do carry credit risk, even though, they take exposure to companies, banks and other institutions. However, with new regulations introduced by the Securities and Exchange Board of India (Sebi), mutual funds are required to declare the indicative portfolio with indicative ranges not exceeding 5 per cent in the SID (scheme information document) of the asset classes (CPs, CDs, gilts) and rating classes (AAA, AA) that they plan to invest in at the time of launch itself. This may help an investor to understand the credit risk in an FMP portfolio that he is looking to invest in. Further, mutual funds are also required to disclose credit evaluation policy for the investments in debt securities in the SID of the FMP.

All in all, the ease, convenience and transparency of investments make FMPs one of the suitable investment products to take advantage of in the present interest rate scenario.

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Things you should do when you get lump sum corpus

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 03 Apr 2012 09:01 AM PDT

Far from the media glare and reality shows, there are, in fact, many Kumars who find themselves rich overnight. The money may come from winning a lottery or from the sale of an ancestral property, which was under litigation for decades. Or the way to riches could be equally worthy of a reality show: unexpected inheritance from an uncle who disappeared 50 years ago or an old box full of forgotten stocks that is worth crores today. Or it could be boring, like stock options encashed or an out-of-turn bonus. Now the big question: do all these fortunate souls walk into the Goa sunset, holding their partner's hand and then live happily ever after? Very unlikely, if you would go by umpteen number of stories doing the rounds (many of them would be product of pure envy) about people who in no time return to their humble origins. Sure, we don't have any statistics to support these apocryphal stories. However, if you google for stories of jackpot winners turning bankrupt, you would figure out that such stories also make it to reality shows abroad. Closer home, you can google for sob stories of yesteryear stars who didn't have a roof over their heads in their old age. Some studies abroad show that when a person with inadequate education and money managing skill begets a huge amount, the chances of mismanaging the money (and reduced to poverty again) are significant. Just imagine that you got a huge (let your imagination run wild) sum, and then ask yourself what you would do with it. In a matter of seconds, you would have repaid your loans, vacationed in Switzerland, bought a place next to Shahrukh Khan's at Bandstand in Bandra, a posh Mumbai suburbs. Crazy, right? Well, that is the trouble with huge amounts. And it always need not be in crores. For a regular white collar guy, even an unexpected . 10 lakh can be difficult to manage. That's why it is essential to learn a few tricks to preserve, and then grow, such sudden wealth.

Be An Invisible Man

As a child, you would have dreamed about becoming invisible. Well, it is your turn to put that into practice. The moment you and the money becomes the topic of conversation in your circles, do a disappearing act. This will save you two troubles: one, you don't have to deal with well-wishers bombarding you with advice and near and dear ones bothering you with sob stories to pocket a bit of your fortune. Two, you will get some breathing space to think.

Keep quiet and only tell your close relatives or confidants about it. Keep a low profile till you actually get the money in your hands. If the money is huge, it could be a life-altering situation for you. You may need a new address, wardrobe, cars and so on. Take a deep breath and wait for a few months (some experts advocate years) before taking any major decisions. Wealth brings with it a lot of emotional change and one needs to have a waiting period before deciding on what to do with the money. This may take as much as three to six months, depending on the individual. An investment tip for safekeeping the money in the interim: tuck it away safely in a fixed deposit or a liquid mutual fund.

Keep Taxes, Legal Angle In Mind

When a jackpot comes your way you need to consider the tax angle and any legal liabilities. So, if you win . 1 crore in a lottery, and have to pay a 30% tax, you are left with only . 70 lakh. Therefore, make plans only for . 70 lakh.

If it's a case of inheritance like real estate, chances of a dispute are likely. So be prepared for it, too. There could be counter claims which you would not be aware of, or someone may demand his/her share. You would do well to make provision for such claims.

Control Your Spending

A windfall is usually followed by a spending spree. Think of what you did with your huge bonus last year and you will get some ideas. The problem could be acute in the case of jackpots and lotteries. "They would end up buying fancy cars and staying in expensive hotels," says S Shankar. Gambling, greedy relatives and friends, shady wealth managers... the potential troubles could be endless. Take time to think before you act. Do not merely splurge this money, but think of protecting this money and growing it over the long term. There is a tendency to treat such windfalls lightly than say, one's salary or bonus. People usually treat inordinately large sums as free money and are not careful with it. Experts call this mental accounting. Many people tend to mentally account for sudden money in a different way, whether it is from your salary, investment or lottery, money is money. It is worth the same, and it should be treated the same.

Seek Help Of Money Manager

If you are intimidated by the amount, it is better to find a professional to handle the money for you. Sure, there will be no dearth of relatives and friends willing to give you their advice. Besides your bank, brokers and advisors would also chase you. You will be flooded with opinions and choices. It is necessary to hire an advisor, who you acts in your interest. However, these professionals should picked up very carefully because most of them don't care beyond their commissions and fee. One helpful tip: don't opt for anything you have problem understanding. Stick to simple things like fixed deposits, bonds, mutual funds and so on.

Don't Take Unnecessary Risk

A huge kitty often makes people reckless. Many suddenly want to quit regular jobs and set up businesses. Others want to take a long sabbatical. Sure, you can do all these things, but wait a bit before the entire thing really sinks in. Do not quit your job in haste. You may be very wealthy now, but you will need something to keep you busy and keep you from spending all of the money.

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