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Monday, May 21, 2007

FMPs are more lucrative than Bank FDs

a Fixed Maturity Plan (FMP) while yielding almost the same return as a bank fixed deposit, is superior to the latter on a post-tax basis.
a longer termed FMP (of over one year) has an even better edge than its shorter-termed counterpart.The reason is that for an FMP of over one year, the return is taxed as long-term capital gain and not normal income. Readers of these columns would know that the capital gains tax structure is much more beneficial than normal income tax.

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