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Can I invest in a gilt fund for six-eight months?

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ET Online|
Aug 26, 2019, 10.53 AM IST
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I am 30 years old. I am looking for a substitute for savings account to park my monthly surplus, while maintaining liquidity. I have a moderate risk appetite and I am targeting 8-10 per cent annual return. My goal is to meet some short- term expenses in six to eight months, like home loan prepayment and others. I am planning to invest in Reliance Gilt Securities Fund. Is the choice of fund correct? If no, please suggest some good schemes. I am new to debt mutual funds, though I have a good understanding of equity funds.
--Sunny Dayal

Rishabh Parakh, Founder, Money Plant Consultancy, responds:


If you are looking for an alternative to your bank account, you can consider investing in liquid mutual fund schemes. It may offer marginally higher returns than savings account. To get 8-10 per cent returns, you need to invest debt funds other than liquid funds. However, you should remember that these funds come in all shapes and sizes and carry credit risk.

You cannot expecting 8-10 per cent from your investment in just six to eight months. Due to a lot of movement in the credit market, even liquid and debt funds returns have been varying. You need to play your cards carefully and invest only after you understand debt mutual funds like the way you know about equity funds.
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