Sunday, January 16, 2011

MIPs, income funds, short-term funds and liquid funds

MIPs have an equity component (sometimes as high as 20-25%) and hence is the riskiest of the lot.

Income funds have some capital risk, but generally give better returns compared with fixed deposits over three-five years. 

Short-term funds have less capital risk and are meant to be held for six months to a year. Liquid funds are the safest of the lot with returns comparable to savings account returns.

These, however, are typically used less as investment vehicles and more as source funds for systematic transfer plans to equity funds.

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