Facing financial crisis? No worries! These investments may bail you out - Here is how
Mutual fund investments are considered as an indirect equity investment even when it's a debt mutual fund.
Mutual fund investments are considered as an indirect equity investment even when it's a debt mutual fund. So, from a long-term perspective, it has been found that if chosen a correct mutual fund scheme can outperform popular indices in terms of giving returns. However, a mutual fund investor must know that his or her mutual fund can fetch a loan against one's investment in mutual funds during the financial emergency.
Speaking on how one's mutual fund investments can fetch loan during emergency Kshitiz Mahajan, Co-founder at Complete Circle Consultants said, "One can get a loan against shares and mutual fund investments. On can get loan up to 60 per cent of one's mutual fund net asset value or NAV. On a loan against mutual fund investments, the interest rate applied is from 10-12 per cent, depending upon the longevity of the mutual fund investment and the credit record of the mutual fund investor." In the case of debt mutual fund investment, the loan amount can be up to 80 per cent to 90 per cent.
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Mahajan said that during financial emergency one can avail loan against one's equity investments as well. One can get 50 to 60 per cent of one's equity investment value as loan amount during an emergency. However, in the case of loan against the mutual fund or equity investment, there would be processing fee levied on the loan applicant. Mahajan said that one will have to pay around 0.50 per cent to 0.75 per cent as a processing fee for the loan against the mutual fund or equity investment. Mahajan said that one can get a loan against one's investment like bank FD, insurance, PPF, NSC etc.
Kshitiz Mahajan said that in case if someone has no mutual funds investment then one can think of availing of loans against insurance as it is also a better option to generate money during a financial emergency. He said that one can avail up to 80 to 90 per cent of the insurance surrender value as a loan during an emergency. One can get a loan on money back or endowment insurance policies.
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