Should my mother invest her money in debt or MIP

Should my mother invest a lump sum amount (received after retirement) directly in Long Term Debt Fund/MIP/Combination of both at one go, or should she do an SIP. If SIP, what would be the ideal duration for investing the whole amount? Also for SIP, should she put all the money in Liquid Fund and do an STP from Liquid to Debt Fund? She has steady rental income, so there is not much need of monthly withdrawals currently and on investing in FDs she would fall in 30% tax bracket, investment horizon is 5+years. As the risk appetite is low, we are not considering pure Equity or Balanced Funds?

May 6, 2017 by Mohit, Ghaziabad | Mutual Fund

Considering that her risk appetite is low, investing in debt funds makes sense. However, hybrid debt funds are also a good option as her investment horizon is 5 years. If you are investing in debt Funds then there is no need to do STP from liquid, you can straightaway invest in the respective debt funds.

In case you are investing in hybrid debt funds/ MIPs, the same strategy can be followed given that equity exposure in MIPs are quite less.

By not considering the equity and balanced fund for your mother, you have taken the right decision given her risk profile. While investing in debt and MIPs, go for growth option as you can benefit from indexation after 3 years and pay capital gains tax @20% post indexation.

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