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?
MUKESH CHOPRA: Vidya Bala,
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.
HEALTH INSURANCE REAL ESTATE/LOAN
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 email@example.com
Joint Managing Director and CEO, DHFL, replies: