Want to invest in mutual funds but don’t know how to go about it?
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Get all your mutual fund related queries answered by our expert, Feroze Azeez, deputy chief executive officer, Anand Rathi Wealth Management, on our show Mutual Fund Corner.
Q: 50-year-old Kumar Manwani writes us from Mumbai. I always pay car loan by cash at 12 per annum bank interest plus documentation/processing charges, which the banks charge to my close friends and relatives. I usually procure postdated cheques (PDCs) from them, which fortunately till date have never bounced.
In the last seven years, at every point of time/on any single day, I have financed three cars of various loan duration's. Thereafter, I used to open a one year recurring deposit (RD) account and used to deposit the PDCs in the said RD account. After one year when RD matured, I transfer the funds to fixed deposit receipt (FDR) till the duration of loan and continued the process till the car loan was fully paid. For each car loan, this process was followed. I went on opening multiple RD accounts and FDRs and earned returns of about 20 percent, that is, yield to maturity, till car loan was repaid.
Now, I am tired of this whole game, multiple accounts, etc. Instead, I want to invest PDCs in tax saving mutual funds (read Axis), where my taxes also will be saved (on the basis of past 7 years track record of Axis Tax Savings Fund). Please suggest, what will the returns be? My average loan period is four years for cars. Will I earn more money this way or continue rogue investing.
A: You have been following a very tedious process since last few years. Instead, if your idea is to save tax, we suggest you to invest in ELSS funds. You can invest in Axis Long-term Equity Fund and Motilal Long-term Equity Fund.
| 1-year | 3-year | 5-year | 10-year | |
| Axis Long-term Equity Fund | 6.54% | 13.44% | 20.53% | - |
| Motilal Oswal Long-term Equity Fund | -5.02% | 15.57% | - | - |
| Category | -3.28% | 11.46% | 16.53% | - |
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First Published: Dec 18, 2018 4:46 PM IST
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