explore youe reasons and benefits for selecting a particular bond , you have just inherited 30,000...

explore youe reasons and benefits for selecting a particular bond , you have just inherited 30,000 and would like to invest the loney in a conservative investment as you prepare for retirement ten years from now . describe the factors you woukd consider in evaluating a mutal fund investment

Expert Solution

If I stand to retire 10 years from now and I inherited 30,000, I woudl invest it in conservative mutual funds i.e either Debt mutual funds or Balanced Mutual funds.

Benefits for investing in Debt based Mutual funds:

1. My capital is protected. Money would be re-invested by mutual fund companies in debentures or bonds that pays return in the form of interest. Hence, Capital is not disturbed as in case of equities.

2. Liquidity: Unlike Fixed Deposits, money is liquid and can be withdrawn anytime when required. There can be a lock-in period but lock-in period would be limited to 1 year to 3 years depending upon scheme.

3. Tax Benefits: In long term, these provide more tax benefits than fixed deposits. Holding funds for more than one year would make your investment liable for long term capital gains, you can avail indexation benefits for long term fund investments.

4. Systematic Withdrawl Plans: Since you would be at retirement age after 10 years, you can schedule systematic investment plan to meet your monthly expenditure.

jeff jeffy answered 2 years ago

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