WHY Arbitrage Funds are better than Fixed Deposit Funds & Bonds ?
Investors of all class tend to usually to go for investments in Fixed deposits and some of them even go for the traditional bond market
The main USP of these traditional funds is that they offer risk free fixed returns but they majorly lack in rate of return they provide
The rate of return they usually provide is around 6-7% but people tend to forget to take into account the post tax returns they provide which hardly comes to around 4.9%
AND IF WE TAKE INTO ACCOUNT INFLATION – THE RATE OF RETURN COULD BE EVEN NEGATIVE
Fixed Deposits and bonds of any type are always taxable …..
Instead one should go for arbitrage funds these offer stability and slow growth over other mutual funds scheme and even if there is no more indexation benefit available now the gains of up to 1,25,000/- are tax free after a year
Hence choosing arbitrage funds over Traditional fixed deposit schemes helps one eliminate the tax inefficiency and tax can be planned in a better way and can be saved in a right manner
“MANAGING RISK IS IMPORTANT NOT ELIMINATING IT”
