[S_U_N]

Originally Posted by katpasin

Did some research and invested in JM Money manager. Has exit load if withdrawn within a month and a good return.. So far it has been fetching me 9.43% annualized.

Guess, this is the best Low-Risk return you can get on ultra short term

So, did you select the dividend with daily reinvestment option?
As per the article (link posted by aditya101), that seems to be the best option. However, those funds are not rated - I don't know why.

Originally Posted by sgiitk

For us debt funds are excellent as long as we use the growth option, and start withdrawing only after a year.

Agreed.
Within that category, the "dividend with daily reinvestment" type seems a lot more lucrative from tax saving perspective. What is your opinion?

Edit: With DTC coming in from next April, there was some change expected with respect to dividend tax. This means, we now have just 5 odd months where we can have tax free dividends ensured. After that, we don't know what will happen.

[sgiitk]

Originally Posted by S_U_N

So, did you select the dividend with daily reinvestment option?

I am not aware of the treatment of the daily div reinvest option. Growth achieves the same for me - if fact better since the tax is only at the time of withdrawal. This option is only for ultra short term funds in general.

As for DTC I think PC has sent it to the drawing board, so I think we will have time till 2014 before it kicks in. At the moment I will not bet on anything there.

[aditya101]

Originally Posted by sgiitk

Growth achieves the same for me - if fact better since the tax is only at the time of withdrawal.

As per my understanding, captial gain on debt MF is taxable irrespective of tenure (unlike Equity MFs). This is because of the taxation rule on the underlying instruments. On equity shares there is no tax on Long Term capital gains, while on interest from FD and bonds tax is imposed irrespective of tenure.

I welcome being corrected by fellow members.

[sgiitk]

@Aditya; Yes. But the tax is only 10% without indexation or 20% with indexation in most cases. In either case the nett return will beat FDs by a big shot. You can choose which mode you want for each investment at the time of redemption.

[katpasin]

Originally Posted by S_U_N

So, did you select the dividend with daily reinvestment option?
As per the article (link posted by aditya101), that seems to be the best option. However, those funds are not rated - I don't know why.



Agreed.
Within that category, the "dividend with daily reinvestment" type seems a lot more lucrative from tax saving perspective. What is your opinion?

Edit: With DTC coming in from next April, there was some change expected with respect to dividend tax. This means, we now have just 5 odd months where we can have tax free dividends ensured. After that, we don't know what will happen.

Ahh.. Well...
Dividend option deducts dividend tax of almost 14%... This is deducted by the mf company before distribution. Since my objective was ultra short, i. Went ahead with growth option... And thr is no deduction made by the mf company... And most likely it would not show up on the income section of my IT return.... After all how many of us show savings bank interests in their return..

[S_U_N]

Originally Posted by katpasin

Ahh.. Well...
Dividend option deducts dividend tax of almost 14%... This is deducted by the mf company before distribution. Since my objective was ultra short, i. Went ahead with growth option... And thr is no deduction made by the mf company... And most likely it would not show up on the income section of my IT return.... After all how many of us show savings bank interests in their return..

The recommendation that I was given:


Debt funds held for less than a year

Go for growth if you are in 10% tax bracket. Go for dividend if you are in higher brackets.
In this case, the short-term capital gains are added to your income and taxed at the rate applicable to you. For someone in the 10% slab, growth would be favourable because the DDT is higher at 12.5%. On the other hand, dividend is beneficial for those in the 20-30 % tax bracket as the DDT is lower.


Debt funds held for more than a year

Go for the growth option.

What is your opinion?

Edit: I show my bank savings account interest in the returns.

[katpasin]

If you want to be invested more than a year, i would always recommend equity MF.. For debt funds Have seen the average returns to be around 10%(i think it's lower) and that too not guaranteed. You would be better off with good fixed deposits or company deposits or equity MF.

[null]

Hi,
I need some help in trying to find the capital gains/loss for my units which were purchased with Dividend re-invest option few years ago. So, across the last 3 years, I have earnt dividend & this was used to purchase units automatically. Now, I have sold all the units & want to compute the capital gains for this entire transaction.

I could not really find any calculators (online or excel) for this type of transaction.

Any guidance please?
Thanks,

[Max]

Originally Posted by katpasin

After all how many of us show savings bank interests in their return..

I will strongly suggest you not to do such things. Never hide your accountable income from tax man as they can open your files up to last 8 years under scrutiny and then you will end up paying interest+penalty for all 8 years or bribing the system. Why take risk?

Originally Posted by S_U_N

Edit: @Max: Why have you suggest JM RP Growth option? The article talks about Dividend option - with daily reinvestment. There is one more plan JM Money Manager Fund - Super Plan - Daily Dividend
Isn't that the one which will give us that benefit?

Most of these funds also offer daily/weekly/monthly dividend option which you can also re-invest through dividend re-invest option or cash them for your needs. However, I think they pay 12.5% dividend distribution tax which is deducted from your dividend.

If you want to invest your money for few days to few months or you are not sure when you will need it, dividend re-invest is the best option. If you want to remain invested for more then 1 year then growth option is the best.

Read here about tax implications:

http://www.valueresearchonline.com/s....asp?str=12851

If a mutual fund is held for less than one year, it classifies as a short-term capital asset and if it is held for more than one year, it becomes a long-term capital asset. The gains arising from the sale of a short-term capital asset are called short-term capital gains and the gains arising from the sale of a long-term capital asset are called long-term capital gains.

The short-term capital gain on debt funds is added to the taxable income of an individual and is taxed as per the applicable tax slab. Long-term capital gain is taxed at 11.33 per cent without indexation or 22.66 per cent with indexation.

It seems article include surcharge, which is no longer applicable and tax is 10% without indexation and 20% with indexation as suggest by sgiitk sir.

[faustus77]

Hi everybody
SGIITK post no 294 makes a very valid point for debt funds.
As I have posted earlier I opted for growth rather than dividend(in debt funds) as the dividend distribution tax is avoided.With high inflation the inflation index would provide a cushion.
There is an article in today's economic times on short term debt funds.
http://epaper.timesofindia.com/Defau...&ViewMode=HTML

Happy investing/saving regards

[aditya101]

Primer on "Indexation"

http://www.google.co.in/url?sa=t&rct...jwksJHmM3DpQXg

[sgiitk]

With S & P threatening a downgrade, I feel all this about Sensex at 20,000 by the end of the year is just talk, maybe trying to talk the indices up.

As a pragmatic pessimist I do not see much hope before the next elections. So am staying away from Equity funds. Maybe if you have a risk appetite, then go for some Small/Midcap based funds.

[carbookie]

Seeking opinion on my mutual fund portfolio SIPs. The amounts are relative:

DSPBR Top 100 Equity - 2.5/-
DSPBR Mid & Small cap - 1.0/-
HDFC Balanced fund - 4.5/-
HDFC MIP - 4.5/-
HDFC Top 200 - 1.0/-

[sgiitk]

@carbookie; i consider all the funds quite good. I have been/ or am in three of them. remember confidence is more important that short term performance. Only whether both HDFC Top 200 and DSPBR Top 100 may have too much of an overlap.

[faustus77]

Originally Posted by sgiitk

@faustus77; I have been with the DSP MIP for many years. At one time it was called the Super Saver Income Fund and there were three flavours Aggressive, Moderate and Conservative. I think the others still survive.

SGIITK
Hi
moneycontrol shows only one option.
However my agent did confirm that there is more than one option.
Thanks for correcting.
Regards