Cash Flow Generating Investment Ideas

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Hello,

I am looking to invest some funds in cash flow generating ideas and wanted to get your valuable suggestions on the same. The constraints are as follows:

Duration: Minimum 12-18 months
Cash flow frequency: Monthly/Quarterly

Thanks in advance.

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12-18 months is a short period, capital protection is imperative in such periods. So a simple FD will do the job, any market-linked product may result in unexpected results.

Even liquid funds could fall, although the time taken for the recovery is less compared to other funds.

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you can look for Mahindra finance online FDs
https://fixeddeposit.mahindrafinance.com/

  • The MMFSL Fixed Deposit has a Crisil rating of ‘FAAA’, which indicates a high level of safety
  • 0.25% additional interest rate for senior citizens for Samruddhi Fixed Deposits.
  • 0.35% additional interest rate for all Mahindra group company employees & employees’ relatives for Samruddhi Fixed Deposits.
  • 0.10% additional interest rate for Senior Citizens for Dhanvruddhi Deposits(Mode of the investment-Only Online transaction through MMFSL website)


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6

If the ratings agencies downgrade a company which a fund has invested in, the NAV will fall. But as the maturity is of 91 days, the fund comes out such bonds quickly compared to longer duration bonds. In 2017, Taurus fund house has invested in Ballarpur Industries and the NAV of its liquid fund has fallen 7%.

2 days ago, same happened with Infrastructure Leasing & Financial Services’ companies rating was rated down from AA to BB, and there has been a fall of many funds’ NAV which in total have invested 2900 crores in the group.

Liquid funds have lowest risk, not zero-risk. But you can’t know when or how it would happen, so you simply stick to AAA credit rating funds. If needed more assurance, check the complete portfolio of the fund you are going to invest in, if you are suspicious don’t invest. Then again after a bond expires, the fund will buy a new bond to replace it, in other words you should check the monthly factsheets of the fund. I know it’s tedious. Also, it seems even liquid funds which invest in sovereign bonds cannot escape a fall, when the rupee was falling in 2013 July, RBI increased the interest rates, and these liquid funds fell.

The impact overall would be less in liquid funds compared to other funds. So yes, it is practical to invest in a liquid fund which has instant redemption and to utilize the money while the markets are falling, but the practicality comes at a cost.

Apologies for the edits, I was mixed up with many things.

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A riskier idea than the ones above, but one with good cash flows, is investing in Indigrid Invit (India Grid Trust), an infrastructure trust which invests in power transmission assets. You can expect around 12.5-13% annual yield (Rs 12 per unit) (Rs 3 per quarter) for the next couple of years at least at CMP, which is around 92.50.
The minimum lot size is 5103 units.
Of course, the price could be lower (or higher) when you need to liquidate them, so it’s far riskier in that sense. Might not suit your purpose, but just wanted to put it on the table. Please do your own due diligence if you are even considering it.
Disc: Invested

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Invest in IndiaGrid InvT = 13% Dividend yield.

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Amitbhai: What are the tax implications for the dividends (in the hands of the investor?)

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The nature of payment is interest… I think it will be taxable as income from other sources.

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