Amit Gobind is no pushover when it comes to investing in smart products. A keen reader of financial publications and an observer of swinging market indices, the 38-year old banking executive took pride in most of his investment decisions until the time someone asked if he had invested in the latest Fixed Maturity Plans or FMPs. He had just shifted bulk of his investments into term deposits to avoid market shocks despite knowing well that his tax liability would go up. Soon, a flurry of FMP launches happened and put Amit in a quandary - did he miss something here?
Let us explore FMPs and their fundamental differences with FDs.
FMPs typically take advantage of high interest rates prevailing in an economy; hence most funds make loud noises when the situation is conducive, as is the case at present. These plans come with an average tenor of 1-2 years while a few are in the range of 1-3 months as well. Generally considered safe, FMPs are attractive for individuals in the highest tax