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I am a 50year-old with a fixed de­posit (FD) of `20 lakh which will ma­ture this year. I want to grow my cor­pus fur­ther, but FD is not an op­tion as the re­turns are ex­tremely low. I am keen on mu­tual funds and would like to know which funds you would sug­gest. Should I in­vest in balanced funds?


If you are merely look­ing for an FD sub­sti­tute, you should con­sider only debt funds. Short-term debt funds such as HDFC Short Term Op­por­tu­ni­ties or long-term in­come funds like DSP Black­Rock In­come Op­por­tu­ni­ties are good op­tions. Al­ways con­sider the growth op­tion and not the div­i­dend. If you are look­ing at a five-year-plus hori­zon, you can go for balanced funds such as HDFC Balanced or L&T India Pru­dence. A balanced fund pre­dom­i­nantly in­vests in eq­uity and in­volves all the risks of an eq­uity fund. Also, you must not con­sider get­ting reg­u­lar div­i­dends from balanced funds. No fund guar­an­tees it. In­vest in the growth op­tion and be will­ing to face short­term vo­latil­ity in balanced funds. If you are in­vest­ing in balanced funds now, it may be a good idea to in­vest through SIP/STP rather than putting in a lump sum amount.


I re­cently took a home loan but had to buy prop­erty in­sur­ance along with it. The in­sur­ance has been added to the loan amount, and it seems an ad­di­tional bur­den. Is it manda­tory to buy such in­sur­ance? Should I buy it?

KHUS THAKKAR: Harshil Me­hta,

Prop­erty in­sur­ance or any other re­lated in­sur­ance is an op­tional prod­uct. But fi­nan­cial in­sti­tu­tions of­ten rec­om­mend that cus­tomers should in­sure their fi­nan­cial li­a­bil­i­ties as it plays a crit­i­cal role dur­ing a con­tin­gency. How­ever, you can choose any in­surer, and the pol­icy can be as­signed to the fi­nancier. Home loan in­sur­ance is im­por­tant as it en­sures that your fam­ily will still hold the valu­able as­set even if there is a cri­sis or an un­fore­seen sit­u­a­tion. Please send your queries to mon­ey­to­day@in­to­

Joint Man­ag­ing Di­rec­tor and CEO, DHFL, replies:

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