Let’s understand Capital gain tax with the help of examples.

Budget 2024 – How Much Capital Gain is Tax-Free?

There are different capital gain taxes for different securities.

What is Capital Gain tax India?

Capital gains tax is a tax on the profit booked from selling assets such as stocks, equity mutual funds, bonds, real estate, and other investments. 

 Listed Securities

For listed securities, a holding period of 1 year is termed as Long term holding. Thus if you sell listed securities (such as stocks, equity mutual funds, Equity ETFs, Gold ETFs,Bond ETFs, Listed Bonds, REITs, InVIT, or Sovereign Gold Bonds ( SGB)) after completion of one year, it will be termed as Long Term Capital Gain. and it will be taxed.

Unlisted Securities 

For Unlisted Securities holding period of 2 years is considered as Long term capital gain tax. Below are securities or assets that fall under this category. 

1. Debt Mutual Funds (Units bought before 1st April 2023)
2. Foreign Equity Funds
3. Unlisted Stocks (Indian or Abroad)
4. Real Estate
5. Physical Gold
6. Gold Mutual Fund

Neither Long Term nor Short Term

few securities will be taxed atA Few securities will be taxed as per your tax slab rate. There is no holding period limitation on this. Whenever you sell you will pay capital gain tax as per your income tax slab rate. 

• Debt Mutual Funds (UNits bought after 1st April 2023)
• Market Linked Debentures
• Unlisted Bonds or Debentures

When is the new capital gain tax applicable?

Post-budget capital Gain tax rules will be applicable on the sale of securities from July 23, 2024. For Securities sold before July 23, 2024, the old tax rules are applicable.

https://www.instagram.com/reel/C92T8jAB4c-/?igsh=NG40OHV3ZXNwcXRw

How Capital Gain tax is Calculated?

Equity MF Capital gain Tax

Suppose Bestii Singh purchased Equity Mutual Fund in 2020 for Rs. 150000. Now the value of this fund is 312000.

Capital gain on MF/shares will be 312000-150000 = 162432

Now the taxes on gains upto Rs 1,25,000 are not taxable.

Gains above 1,25,000 is 37432. These gains will be taxed at 12.5%.

So Bestii will pay an LTCG (capital gain tax long term) of Rs. 4679.

Debt MF Capital gain Tax

Now Suppose Bestii Singh purchased Debt Mutual Fund in 2020 for Rs. 150000. Now the value of this fund is 312000.

His LTCG tax is 12.5% with no expemtion of 1.25 lac. Thus his entire gains are taxed at 12.5%.

Debt MF tax will be Rs. 20304

suppose he purchased it 2 years before then his entire capital gains tax short term will be added to his income and taxed as per his income tax slab rate.

How much Capital Gain is Tax Free?

In case of Equity MF/ Shares, If sold after 12 months, the gains are termed as Long Term Capital Gains. Capital Gain upto Rs. 1,25,000 is tax-free. There is an exemption on capital gains tax is 1.25 lac.

What is the capital gain tax on property?

For properties the Long term is calculated as 2 years. If a property is sold after 2 years, LTCG is 12.5%. Whereas if property is sold before completion of two years, the gains are taxed as per income slab rate.

Here’s a simple guide to some of the best short-term investment options available in India.

What are Short-Term Investments?

Short-term investments are financial investments for a very short period, i.e. investing for a few days to few years. The aim is generally high liquidity, low risk, easy to start and easy withdrawal procedure. Above all the procedure should not be time taking.

Best Short-term investments are preferred by investors who want to preserve capital or earn medium returns over a short time horizon. The ultimate need is the flexibility to access funds quickly.

Best Short-Term Investment Options in India

1. Fixed Deposits (FDs)

Fixed Deposits are the most loved investment option for Indians. Fixed Deposits are well known for their fixed return, super easy setup and easy withdrawals.

FD is a safe investment option for tenure ranging from 7 days to 10 years. FDs offer a fixed rate of interest, which is higher than a regular savings account. The returns are guaranteed, making it a risk-free investment.

• Tenure– 7 days to 10 years
• Interest Rate– 3% – 8.5% per annum (varies by bank)
• Risk-Very low

SBI Amrit Vrishti FD – Interest Upto 7.75%

Post Office FD Rates 2024

2. Recurring Deposits (RD)

Another secure option is Recurring Deposits. RDs are perfect for those who want to save a fixed sum monthly. You can choose the tenure ranging from 1 year to 10 years. It’s an excellent way to build a corpus over time with guaranteed returns.

• Tenure- 6 months to 10 years
• Interest Rate- 3% – 8% per annum (varies by bank)
• Risk- Very low

SBI RD Interest Rate 2024- Recurring Deposit

Recurring Deposit Calculator- Features & Benefits

3. Liquid Mutual Funds

Liquid Mutual Funds are debt mutual fund that invests in short-term money market instruments. They offer better returns than savings accounts and provide high liquidity, allowing you to withdraw your money quickly without any exit load ( penalty).

• Tenure- A few days to 3 months or more
• Interest Rate- 3% – 7% per annum (varies by fund)
• Risk- low

4. Short-Term Debt Funds

Short-Term Debt Funds invest in debt securities with a short maturity period of 1 to 3 years. These funds provide better returns than liquid funds and are relatively less volatile as compared to equity funds.

• Tenure- 1 year to 3 months or more
• Interest Rate- 6% – 9% per annum (varies by fund)
• Risk- low to moderate

5. Treasury Bills (T-Bills)

Treasury Bills are government securities issued by RBI. T Bills are issued by GOI for short-term borrowing. They are available in three tenures: 91 days, 182 days, and 364 days. T-Bills are considered very safe as they are backed by the government.

• Tenure- 91 days, 182 days, 364 days
• Interest Rate- 3% – 6% per annum (varies )
• Risk- Very low

Govt. Bonds Online – RBI Retail Direct Scheme

6. Post Office Time Deposits

Post Office Time Deposits are Fixed Deposit with Post Office. They offer fixed returns and are backed by the government of India, ensuring safety and reliability.

• Tenure- 1 Year, 2 Year, 3 year & 5 Year
• Interest Rate- 5.5% – 6.7% per annum (varies by tenure)
• Risk- Very low

Post Office FD Rates 2024

8. Corporate Deposits

Corporate Deposits are fixed deposits provided by companies or financial institutions. They usually have higher interest rates compared to bank FDs but come with a higher risk. It’s essential to choose reputable companies to minimize risk.

• Tenure- 1 Year -5 Year
• Interest Rate- 6% – 10% per annum (varies by tenure)
• Risk- Moderate to high

9. Post Office Mahila Saving Samman Yojana

Post Office Mahila Saving Samman Yojana is available for female investors. The maximum Deposit limit is Rs.2 lac.

• Tenure- 2 years
• Interest Rate- 7.7%per annum
• Risk- Low

Post Office Saving Scheme- Unlocking The Benefits

10. Arbitrage Fund

Arbitrage Funds are a mutual fund category that takes advantage of price differences between different markets. In other words, these funds generate riskless profit.

Above all Arbitrage Funds bear Equity taxation which means a lower tax rate. High-income people can take advantage of these funds and invest for 1-3 years.

• Tenure- 1-5 years
• Interest Rate- 7.7%per annum ( Vary from fund to fund)
• Risk- Low

11. Fixed Maturity Plans

The Fixed maturity plans from mutual fund houses are the close-ended funds. These funds have a fixed investment duration that typically ranges from 2-3 years.

• Tenure- 1-3 years
• Interest Rate- 7-10% per annum
• Risk- Low to moderate

12. National Saving Certificate

National Saving Certificate is a 5-year deposit scheme. Govt of India backs the NSC. Just deposit one time money and enjoy the benefits.

• Tenure- 5 years
• Interest Rate- 7.7%per annum
• Risk- Low

What Is National Saving Certificate- Best One Time Deposit Scheme

13. Equity Savings Mutual Funds

Equity Savings Mutual Funds are combination ( hybrid ) mutual fund and thus have lower risk than equity Mutual Funds. These funds combine Equity and equity-related instruments (min.65%), debt instruments (min.10%) and derivatives.

• Tenure- 3-5 years
• Interest Rate- 6%-9% per annum
• Risk- Low to moderate

14. Conservative Hybrid Fund

These funds are debt-oriented hybrid funds. They are also a type of hybrid mutual fund. These funds invest in equity & equity-related instruments 10% to 25% investment and 75% to 90% in Debt instruments.

• Tenure- 3-5 years
• Interest Rate- 6%-9% per annum
• Risk- Low to moderate

15. Dynamic Asset Allocation or Balanced Advantage Fund

As the name suggests Dynamic Asset Allocation funds are hybrid funds. The fund’s asset allocation is managed at the fund manager’s discretion. Fund Invest in equity/ debt and are managed dynamically.

• Tenure- 3-7 years
• Interest Rate- 6%-10% per annum
• Risk- Low to moderate

16. Multi Asset Allocation Fund

These funds Invest in at least 3 asset classes with a minimum allocation of at least 10% in each asset class. Due to diversification within the fund, they perform better.

• Tenure- 3-7 years
• Interest Rate- 6%-10% per annum
• Risk- Low to moderate

Conclusion

Choosing the best short-term investment plan India depends on your financial goals, risk appetite, and liquidity. Fixed deposits and recurring deposits are ideal for risk-averse investors, while liquid mutual funds and short-term debt funds can offer better returns for those willing to take a slight risk. Treasury bills and post office time deposits provide a safe investment avenue backed by the government.

SBI Amrit Vrishti FD – Details

SBI Amrit Vrishti ( Term Deposit) is available from 15th July 2024 to 31st March 2025. The special deposit scheme investment tenure is 444 days. The annual Interest rate is 7.25%. Senior citizens will get 0.5% extra.

SBI Vrishti Term Deposit – Interest Rate

The Vrishti Deposit Interest rate is 7.25% per annum. Senior Citizens will get 7.75% per annum.
#Staff and Staff Pensioners are eligible for additional interest rate applicable to these categories of customers.

How the interest will be paid?

The interest will be credited at the maturity of term deposit. The interest net of TDS ( TDS will be deducted) will be credited to customer account.

Tax Deduction at Source (TDS)

TDS will be deducted at applicable rate as per the provisions of Income-tax Act

Premature Withdrawal

Premature Withdrawal is possible with a penalty. For Deposits up to Rs.5 lacs, Penalty is 0.5%.

For Retail Term Deposits above Rs.5 lacs (but below Rs. 3 Crores) penalty is 1% (all tenors).

If you opt to withdraw before completion of 7 days, no interest will be paid.

Loan

Customers can take loans on ther term deposits.

Where to buy – SBI Vristhi FD

Customers can purchase Amrit Vristhi Yojana from SBI Bank branch, Net Banking, YONO Channels.

SBI Recurring Deposit( SBI RD) allows you to save money in easy monthly instalments. Here, you deposit a fixed sum monthly sum for the chosen duration and a guaranteed lump-sum amount is given at maturity.

Features of SBI Recurring Deposit 

• Deposit Period : 12 months – 120 months
• Minimum Deposit: Rs 100 monthly ((thereafter in multiples of Rs. 10/-)
• Additional Interest: Senior Citizens can avail an additional interest rate of 0.5% over the regular rates.
• Nomination facility: It can be availed when you are making an RD with SBI.
• Investment proof :As an proof of Recurring deposit a passbook entry is given
• Delayed payments: Penalty is charged on delayed payment of instalments.
• OD Limit :You can avail loan/ OD against your SBI recurring deposit. The loan amount may range up to 90% of RD balance amount.

SBI RD Interest Rates 2024

How to Open RD Account in SBI

You can open SBI Recurring Deposit Account either offline or online method.

Offline method

• Visit SBI Branch.
• Fill RD Form
• Mention your basic details, RD amount, Tenure
• RD starts

Online method

• Login your Internet banking
• Open E- RD
• Choose your investment amount
• Choose investment duration
• RD Starts

Documents Required to open SBI Recurring deposit

Proof of Identify

•  Voter Id
• Aadhar card
• Passport Copy
• Ration card
• Government ID Card
•  Senior Citizen ID Card

Address proof

• Passport
•  Electricity bill/telephone bill
• Bank account statement with cheque
• Any certificate or ID issued by any Post Office or similar institution

SBI RD – Non payment Penalty

 Premature Withdrawal

Premature Closure Allowed subject to premature penalty as under:

• For Term Deposit up to Rs 5.00 lacs, the penalty for premature withdrawal will be
  0.50% (all tenors).
• For Term Deposits above Rs 5.00 lacs, applicable penalty will be 1% (all tenors)
• The interest shall be 0.50% or 1% below the rate applicable at the time of Deposits for
  the period Deposit remained with the Bank or 0.50% or 1% below the
  contracted rate, whichever is lower.
• TDS is applicable as per Income Tax Rules.
• Form 15G/15H can be submitted by the Depositor to get exemption from tax deduction as
  per Income Tax Rules.

Recurring Deposit Advantages

• Recurring deposit is highly safe saving scheme with guaranteed returns.
• Low deposit amount – Start with as low as Rs 100 only.
• No maximum limit of monthly investment.
• It’s a boon for risk averse investors.
• One can save a desired corpus by paying small monthly amount.

SBI Recurring Deposit Disadvantages

• Very low interest rates
• Negative Inflation Adjusted returns 
• TDS is applicable
• The Profit amount is fully taxable.
• Not suitable for high tax bracket people.

Types of RD account SBI

Nowadays SBI offers two different kinds of RD accounts to cater for the need of different people.
These RD accounts as follows-

 SBI Regular Recurring Deposit -This is the basic SBI Recurring deposit with a minimum monthly contribution of Rs 100. The duration ranges from 1 year to 10 years. Here you choose to pay a fixed amount for a fixed duration.

SBI Flexi Deposit Scheme- SBI Flexi Deposit scheme is a variable amount deposit scheme wherein one can deposit a variable amount every month.  Here, the minimum monthly deposit amount is Rs.500/- at every deposit. Deposits can be made anytime during a month and any number of times. The yearly minimum deposit amount is Rs. 5,000/- per Financial Year (in multiples of Rs. 500/-) 

Whether you’re saving for a down payment on a house, a dream vacation, or simply want to build a nest egg for the future, the Recurring Deposit calculator is here to assist you every step of the way.

Don’t let your savings sit idle in your bank account. Start maximizing your returns today with our user-friendly recurring deposit calculator. Take control of your financial future and watch your savings grow steadily over time.

What is a recurring deposit?

A recurring deposit is a simple monthly deposit scheme wherein investors deposit a fixed amount every month for 6 months -10 Years.

The interest rate is guaranteed for the entire duration. The investor gets a fixed amount at the end of the duration.

How does a recurring deposit work?

• Just fill in a recurring deposit form ( online or offline ).
• Choose the monthly deposit amount
• Choose investing tenure
• pay the ( recurring) instalments monthly
• Take maturity at the end of the paying duration.

Understanding the benefits of a recurring deposit

• Safe & Guaranteed Scheme – RD is a safe and secure monthly deposit scheme that inculcates a saving habit amongst investors.
• Guaranteed Interest rate – The interest rate is fixed and guaranteed initially.
• Fixed maturity Amount – The maturity is well known at the beginning itself. So, no surprises later.
• Flexible Saving Tenure – Investors can choose from varied tenures of 1/2/3/5 years.
• Use as a collateral – RD can be used as a Loan collateral.
• Senior Citizen Interest rate – Senior Citizens usually get higher interest rates.

What are the Disadvantages of RD

• Low Interest rates – The interest rate is low as compared to other investment product.
• Non-Payment Penalty – If you do not pay the RD monthly instalment, you can reinstate RD with a penalty.
• Premature Withdrawal – If you withdraw prematurely, you get a lower interest rate, which is usually 1 % lower than the RD rates.
• Taxable Profit – The gains (Interest amount) from RD maturity are fully taxable.
• No tax Deduction U/S 80C – There is no tax deduction for the deposit amount.

How much is 5000 per month in RD for 5 years?

As per the Recurring Deposit Calculator, If the interest rate is 6.7% for 5 years, you will get Rs. 3.57 lac at the end of 5 years.

Is recurring deposit a good investment?

RD is a safe investment with no risk. In an RD scheme, you have to deposit a fixed amount every month. The interest rate is low if you compare the return with a Mutual Fund SIP. But RD carries a lower risk.

RD is a safe monthly deposit scheme. But returns can’t beat the inflation rate.

Conclusion

A recurring deposit is a good investment scheme when you do not want to take any risk and need an assured secure return. The best part is the well-known maturity amount. This awareness makes you a confident investor and you get fully equipped for your short-term goals. Investing for long terms does not seem to provide good output as compared to other investments.

Read More:  

Here, in this article, we have shortlisted a 5-year investment plan based on their risk profile, investment amount and return.

Understanding Investment Planning

Investment Planning is the process of shortlisting your future financial goals and aligning and planning your investments with these future goals.

Investment Planning starts with assessing your Financial Goals. Prioritize them based on their importance and plan your investments.

Read more: Why Should You Opt For Goal Based Investment Planning?

How To Set Financial Goals SMARTLY

Factors to consider before investing

Although there can be multiple factors that one should take care of before investing. But a few most important factors are enlisted here.

• Liquidity – ease of withdrawal money
• Risk associated with scheme
• Investment Duration
• Your Investment goal matching
• Taxability of scheme
• Expense ratio of the scheme
• Investment charges, if applicable

Understanding investment is important

We all like huge bank balances, to be able to buy anything we want and to live a good life. But only saving money can not fulfil future needs. Therefore, investing is important to grow our money to multifold. With mindful investing money compounds and helps us become wealthy.

Read more: How To Become Crorepati- SIP 5000 Per Month

How 10,000 SIP For 20 Years Can Make You Rich?

Easy Recipe To Make Rs.10 Crore In 20 Years

Benefits of long-term investment planning

Long-term investment planning HELPS to grow money in value. It is appreciated substantially.

WHY?

Because the compounding formulae is P*(1+r/nt)^t

P stands for principal, r refers to Rate of investment, t refers to time.

Please NOTE that time is exponential, which that means as time increases money also grows beyond your expectations.

Apart from money growth, there are multiple other benefits such as achievement of long-term goals, tax benefits, low volatility, tax saving, power of compounding etc.

How to create a personalized investment plan

• STEP 1: Set SMART Financial Goals
• STEP 2: Divide goals in short, mid & Long Term goals
• STEP 3: Analyze your risk taking capacity, life stage and market outlook
• STEP 4: Set equity and debt ratio
• STEP 5: Choose funds based on your duration
• STEP 6: Diversification
• STEP 7: Monitor your investments

Best investment options for 5 years in India

Bank/Corporate Fixed Deposit

Bank Fixed Deposit is an easy and convenient way to invest money for 5 years. One can take tax deduction U/S 80 C with bank/ Corporate FD.

Corporate FD offer some better returns as compared to bank Fd but possesses higher risk as compared to bank counterparts.

Post Office Fixed Deposit

Time deposit or Fixed deposit post office is available for subscription for a duration of 1 yr, 2 yr, 3 yr and 5 years only. You can deposit money and enjoy its benefits.

Post Office NSC

PO NSC is a 5-year deposit scheme. Any number of certificates can be purchased. Just deposit the lump sum amount and take maturity post-completion of 5 years. Simplicity, safety and riskless tax benefits is the beauty of NSC.

Post Office Monthly Income Scheme 

POMIS provide monthly income to its holder. One can deposit a lump sum amount and take monthly income from the next month. The maximum deposit amount is Rs 9 lac for a single user but if you open the account in a joint name then a maximum 15 lac can be deposited.

Post Office Recurring Deposit

 Post Office Recurring Deposit is a monthly deposit scheme of the post office. Here, you pay a fixed amount ( chosen at the beginning of the period) each month for 5 years. At maturity, the lumpsum amount is paid back to you.

Fixed Maturity Plan

Fixed Maturity Plan (FMP) is a fixed tenure mutual fund scheme, that invests its corpus in debt instruments maturing in line with the tenure of the scheme.

The tenure of an FMP can vary between a few months to a few years.

Senior Citizen Saving Scheme

Post Office SCSS is a superb income scheme for senior citizens. The scheme provides quarterly interest payout.

A senior citizen can deposit a maximum of Rs 30 lac and take a quarterly payout from SCSS. Post completion of this period one can extend the scheme for another 3 years or buy a new SCSS scheme at prevailing interest rate.

Large Cap Mutual Fund

The Large-cap equity fund invests at least 80% investment in large-cap stocks. This Large cap mutual fund seeks long-term capital appreciation. Large Cap mutual funds bear lower risk as compared to other mutual funds since they invest primarily in large-cap or giant stocks.

Hybrid Mutual Fund

Hybrid funds Invest in a mix of equities and debt securities. There are a variety of hybrid funds available such as Conservative Hybrid Funds, Balanced Hybrid Funds, Aggressive Hybrid Funds, Dynamic Asset Allocation or Balanced Advantage Funds, Multi -Asset Allocation Funds, Arbitrage Funds and Equity Savings funds.

Multi-Asset Allocation Mutual Fund

These funds Invest in at least 3 asset classes with a minimum allocation of at least 10% in each asset class. Thus possess a lower risk.

Conclusion

You can choose five year investment option based on your own requirements such as one time investment or recurring investment or if you require income from your money. All best investment options for 5 year are given.

Taking the first steps towards long-term financial success.

You can always work with a Certified Financial planner and plan your finances, including Emergency funding, building a corpus for house purchase, and taking care of your health needs so that you can plan a better retirement income in your second inning, leading to a more secure and financially stable retirement.

Whether you are just starting to invest or a seasoned investor, it’s crucial to understand the risks and potential rewards of each investment plan. No matter your age or income level, investing can be a great way to secure a prosperous future.

By selecting the right investment plan, you can create a financial roadmap that leads to long-term wealth growth. We will help you explore the best investment plans to maximize your returns while minimizing risks.

Types of investment plans for long-term wealth growth

Although there are multiple investment options in India but best investment plan is further categorised based on your risk appetite.

• Best Investment Plan for Risk- Averse Investor ( Low-Risk Investment )
• Best Investment Plan for Moderate Investor (Medium-Risk Investment )
• Best Investment Plan for Aggressive Investors (High-Risk Investment )

Low-Risk Investment

Low-risk investments are suitable for investors who want safe and secure returns in the short or long term.

Here, is the list of some Low-Risk Investment for risk-averse investors:

Bank/ Post Office Fixed Deposit

Bank or Post Office Fixed Deposit are one of the best investment option. FDs are safe and secure. One can start a FD for various durations that may range from a few days to years altogether.

This hassle-free investment is free from market fluctuations and away from market noise.

FDs gives you better returns than your savings bank account.

Post Office 1 year fixed deposit is the best investment plan for 1 year in Post Office.

Check latest Post Office FD rates

Post office FD rates 2024

Post office FD rates 2024

Post Office Saving Schemes

There are more than 12 Post Office schemes to choose from.

Post Office saving schemes include savings such as Post office Time Deposit ( FD ) 1/2/3/5 year, Post Office Recurring Deposit, National Saving Certificate, POMIS, PPF, SCSS, Kisan Vikas Patra, Sukanya Samridhi Yojana, Manila Saving Samaan Yojana and more.

All these saving schemes are safe as backed by Govt. of India.

Explore the post Post Office Saving Scheme- Unlocking The Benefits

Money market funds

Money market funds are a category of short-term mutual funds. This fund belongs to a short-term debt fund having a maturity of 1 year.

Municipal Bonds

Municipal Bonds are the bonds issued by Municipal corporations or similar entities to raise funds.

These bonds are issued for money raising to meet the requirements such as building bridges, social causes, schools or hospitals or such similar causes.

Certificate of Deposits

Certificate of Deposits are the term deposits offered by scheduled commercial banks. The CDs can’t be premature redemption/exit is not allowed in CDs.

Additionally, CDs are freely negotiable.

Treasury Bills

The Government of India issues Treasury bills to raise funds. Tbills maximum maturity time is 365 days. But return is comparitively lower than the money market funds.

RBI Floating rate Bonds

These floating rate bonds provide half-yearly coupon/interest to the bearer. Floating-rate bonds are issued for 7 year duration.

Sovereign Gold Bonds

SGB is another format to hold Gold in paper format. Probably it is the best option to invest in since these bonds also give 2.5% annual interest apart from increment in Gold Prices.

Sovereign Gold Bond Scheme 2024 Series 4- Should You Invest?

Medium-Risk Investment

Hybrid Debt Funds/ Conservative Hybrid Fund

Hybrid Debt Funds or debt-oriented hybrid funds are a combination of equity and debt. Hybrid debt funds invest more than 65% of assets in debt securities and rest money in equity asset class.

This combination makes them less riskier than equity-oriented hybrid funds or equity funds. These funds give better returns than debt funds.

Arbitrage Funds

Arbitrage funds seek profit on price differentials between derivative and cash market buy taking simultaneous buy and sell positions. Thus taking riskless profit from the price difference in two markets.

Multi-Asset Funds

A multi-asset fund is a combination of asset classes (such as equity, debt or commodities) used as an investment. A multi-asset class investment contains more than two asset classes, therefore creating a portfolio of assets.

The result is lower risk as compared to other funds.

Equity savings Funds

Equity savings Funds are a combination of Equity and equity-related instruments (min.65%), debt instruments (min.10%) and derivatives (min. for hedging to be specified in the SID).

Debt Funds

A debt fund (also known as an income fund) is a fund that invests primarily in bonds or other debt securities. 

Debt funds invest in short and long-term securities issued by the government, public financial institutions, companies – Treasury bills, Government Securities, Debentures, Commercial paper, Certificates of Deposit and others.

High Risk Investment

High Risk investment generally refers to investments that offer high returns but are riskier. Returns are not guranteed and one can see loss/gain in short or long time.

Direct Equity/ Stocks

Direct Equity or direct ownership of the company. Highly risky and highly rewarding investment since you become part owner of profit and loss. This kind of investing may hold good for long-term investing.

Equity Mutual Fund

An equity Scheme is a fund that primarily invests in equities and equity-related instruments. Equity Mf seeks long-term growth but could be volatile in the short term.

Equity Mutual Funds are suitable for investors with higher risk appetite and longer investment horizons.

Forex trading

Forex or Foreign exchange trading refers to network of buyers and sellers who exchanges currencies on agreed upon prices.

Hedge Funds

Hedge funds are actively managed alternative investments that commonly use risky investment strategies. Hedge fund investment requires a high minimum investment. Hedge funds usually target wealthy investors.

Alternate investment

There are two main types- private assets and hedge funds. Private Assets might be private equity, private credit, infrastructure and private real estate. They are more complex and less frequently traded than public stocks and bonds, and give investors access to additional sources of return. Whereas, hedge funds operate mainly in public markets but use less traditional tools such as short-selling and leverage.

Real Estate

Unlike other kinds of investments, real estate investments are big-ticket investments, Usually purchased for long-term for self-use or trading purposes.

Investment strategies for long-term wealth growth

For long-term wealth growth, one can choose to invest in the above-given investment avenues. However, for long-term wealth creation, one can choose to invest in direct equity or equity mutual funds. Few tips to get the best output from your money.

• Buy an investment if it truly matches with your goal -understand the investment before investing
• Diversify your investments across various asset class
• Do not try to time the market – rather keep investing
• Invest for long term.
• Start early
• Choose products that have a low tax impact.
• Start Investing.
• Keep increasing your investments with time
• Get rid of laggards in your Portfolio.

Choosing the right investment plan for your financial goals

The Choice of the Right Investment Plan is difficult but with the best Investment Planning you can certainly choose the best one for you.

Here are the quick tips to start your investing journey.

• Define Your Financial Future commitments – Set SMART Financial Goals
• Categorise them into Short, Mid or Long term Goals
• Analyse how much risk you can take with your investment.
• Choose investments based on investment duration matching with your goal duration and risk profile.

Conclusion:

Taking the first steps towards long-term financial success.

You can always work with a Certified Financial planner and plan your finances, including Emergency funding, building a corpus for house purchase, and taking care of your health needs so that you can plan a better retirement income in your second inning, leading to a more secure and financially stable retirement.

If you have learned something new and found the article informative, Then please share & Comment. This will help me reach more readers and spread financial awareness.

This might interest you:

Types of savings schemes offered by the Post Office

Post Office offers various savings schemes catering to different needs and preferences of customers. Some common types of investment options offered by the Post Office include:

Benefits of saving with the Post Office

Saving with the Post Office offers several benefits, including:

1. Accessibility: The greatest advantage is accessibility in both urban and rural areas. Therefore Saving schemes for post office are widely available making it convenient for individuals to access their savings accounts and invest their money.
2. Trust and Security: Post- Office schemes are government-backed, with safe, secure and trusted returns. Security of money and trust in Govt. makes it the first investor choice.
3. Variety of Savings Schemes: Post Offices provide a diverse range of savings schemes catering to various needs and preferences of customers. Post Office saving schemes include fixed deposits, recurring deposits, senior citizen savings schemes, girl’s welfare schemes, Mahila Saving Samman Yojana and more. This variety allows individuals to choose the option that best suits their financial goals.
4. Competitive Interest Rates: Post Office savings schemes offer competitive and attractive interest rates
5. Tax Benefits: Some Post Office savings, such as the Public Provident Fund (PPF) and Senior Citizen Savings Scheme (SCSS), offer tax benefits under sections 80C of the Income Tax Act. Which help individuals save on taxes while growing their savings. Read: Top 5 Post Office Tax Saving Scheme
6. Affordability & Flexibility: Post Office savings schemes offer flexibility in terms of deposit amounts, withdrawal options, and tenure, allowing individuals to tailor their savings strategy according to their goals. Also, these schemes allow investing in smaller money denominations thus helping people to start saving with small amounts.
7. Stability: Post Office savings schemes are often perceived as stable and reliable investment options, providing a secure avenue for individuals to grow their savings over time.

Overall, saving with the Post Office offers a combination of convenience, security, and attractive savings options, making it a popular choice for individuals seeking to build and preserve their financial assets.

How to open a savings account with the Post Office

Starting a Small saving scheme is simple and easy. Here are the general steps you would need to follow:

1. Choose the Type of Account
2. Visit the Nearest Post Office
3. Gather Required Documents: Make sure you have all the necessary documents ready. This typically includes:

• Proof of identity (e.g., passport, driver’s license, Aadhar card)
• Proof of address (e.g., utility bills, rental agreement, Aadhar card)
• Passport-size photographs
• Any other documents specific to the type of account you are opening (e.g., PAN card for certain tax-saving accounts)

1. Fill Out Application Form: Obtain the application form for opening a savings account from the Post Office branch or their website. Fill out the form accurately and completely.
2. Submit Documents and Deposit: Submit the filled-out application form along with the required documents to the designated officer at the Post Office branch. You may also need to make an initial deposit, depending on the type of account you are opening.
3. Account Activation: Once the verification process is complete and your application is approved, your savings account will be activated. You will receive a passbook, chequebook (if applicable), and other relevant account details.
4. Set Up Online Banking (Optional): one can access Post Office savings accounts online banking facilities. If you wish to access your account online.
5. Start Saving: Deposit money into your savings account and enjoy the benefits.

Understanding the interest rates and returns

Features and flexibility of the Post Office savings scheme

Please Read the post: Latest Post Office Savings Interest Rates 2023- How Change Will Impact You?

Tax benefits and exemptions

Top 5 Post Office Tax Saving Scheme

Withdrawal and transfer options

The deposits in the Post office can be transferred from one post office to another. Even some schemes that are also available with the bank can also be transferred from bank to post office or vice versa.

Security and reliability of the Post Office savings scheme

Post Office savings schemes are Govt. backed schemes with guaranteed returns. Thus anyone can rely with full trust for security for Post office Saving Scheme.

Conclusion:

Make the most of your savings with the Post Office.

How to Plan Your Investment?

You can always work with a Certified Financial planner and plan your finances, including Emergency funding, building a corpus for house purchase, and taking care of your health needs so that you can plan a better retirement income in your second inning, leading to a more secure and financially stable retirement.

If you have learned something new and found the article informative, Then please share & Comment. This will help me reach more readers and spread financial awareness.

Accordingly, a new deposit scheme “SBI Green Rupee Term Deposit” has been introduced to mobilise deposits to support Bank in financing green initiatives.

What is Green Deposit?

A Green Deposit is an interest-bearing deposit, which is received by the regulated entities (RE) for a fixed period. The proceeds from these deposits are set aside towards green finance as per RBI’s notification dated April 11, 2023.

Are Green Deposits covered under the DICGC?

The deposits raised under the Green deposits are covered by the Deposit Insurance and Credit Guarantee Corporation.

SBI Green Rupee Term Deposit -Special FD Scheme

How to Plan Your Investment?

You can always work with a Certified Financial planner and plan your finances, including Emergency funding, building a corpus for house purchase, and taking care of your health needs so that you can plan a better retirement income in your second inning, leading to a more secure and financially stable retirement.

If you have learned something new and found the article informative, Then please share & Comment. This will help me reach more readers and spread financial awareness.

What is the Post Office Public Provident Fund Scheme?

Post Office Public Provident Fund Scheme is a 15-year PPF scheme. The investor has to deposit money for 15 financial years and after post completion of 15 years one can either close the account or extend it further.

PPF Scheme is suitable for risk-averse investors who wish to enjoy tax benefits under section 80C, tax-free returns and tax-free maturity.

Public Provident Fund Scheme – Features

A Public Provident Fund offers safe,secure returns for long tenure. PPF is a great investment scheme for risk averse investors. Further This scheme also provides diversification, tax benefit to investor (EEE advantage). Since PPF money can not be attached to court decree, it makes it more safer for investors with huge debts also.

Moreover PPF account become safe heaven for senior citizens because of its tax free withdrawals and guaranteed safe returns.

What are the Eligibility Criteria for PPF Post Office?

Any resident Indian can open a PPF account for himself on behalf of a minor child or a person of unsound mind of whom he/she is a guardian. 

#Joint account is not allowed.

a #If you open an account on behalf of a minor then the minor will operate the account himself when he becomes a major.

#Individuals who have GPF or EPF can also open a PPF account.

Can NRI Invest in PPF Account?

–NRI cannot open a new PPF account but if the resident individual becomes NRI after opening the account then he can continue the account till maturity on non-repatriation basis.

But no extension is allowed after maturity in case of NRI.

NRI can prematurely close the account subject to certain conditions.

Can HUF Open PPF Account?

Hindu undivided family cannot open an new public provident fund scheme with effect from 13 May 2005. However account opened before 13 May 2005 can be continued till maturity but this account cannot be extended after 13 May 2005.

Which bank is best for PPF Account Opening?

One can open PPF account in post office, nationalized bank and a few private sector banks.

List of banks offering PPF Account & Online PPF Services

• State Bank of India 
• State Bank of Patiala 
• State Bank of Bikaner and Jaipur
• State Bank of Travancore
• State Bank of Hyderabad
• State Bank of Mysore
• ICICI Bank
• Bank of Baroda
• Union Bank of India
• Central Bank of India
• Bank of India
• IDBI Bank
• Vijaya Bank
• Allahabad Bank
• Oriental Bank of Commerce
• Bank of Maharashtra
• Canara Bank
• Dena Bank
• Indian Overseas Bank
• Punjab National Bank
• United Bank of India
• Corporation Bank
• Axis Bank
• Indian Bank

Minimum & Maximum Deposit Amount in PPF The Minimum Deposit amount is Rs 500 per financial year and the maximum deposit amount is Rs 1.5 Lakh per financial year.

#you can deposit in one lump sum or installments in a financial year. There is no limit on the number of instalments in the month of the financial year.

–But the maximum amount of deposit is only 1.5 lac in a financial year for both individual self accounts and the account of a minor or of whom he is the guardian taken together.

Best time to deposit money in PPF Account

If you are planning to deposit monthly then the 1st to 5th of every month is the best time to deposit money.

If you are planning to deposit quarterly then 1st to 5th April, July, October and January at the best times to deposit.

–For half-yearly deposits, the 1st to 5th of April and October are the best time to deposit.

and if you are planning to deposit yearly -the 1st to 5th of April is the best time to get the maximum interest on your money.

Is it necessary to deposit in PPF every year?

If you fail to deposit the minimum amount during any financial year in PPF account than the account will become inactive

Every time you have to reactivate the account by paying a penalty of Rs 50 for each financial year of default and a minimum deposit of Rs 500 for each financial year of default.

Example: Bestii forgets to deposit for two consecutive financial year instalments in his PPF account. He has to pay Rs 100 as penalty charges and Rs.1000 ( minimum payment of Rs 500 per Financial Year) to reactivate the account.

What if you do not reactivate your PPF Account?

The active provident fund scheme will continue to earn interest as per the applicable interest rate of the scheme till maturity. However, inactive accounts will not qualify for loan or partial withdrawal.

If your account is inactive then you are not allowed to open another provident fund scheme till you close the inactive account after the maturity period.

Public Provident Fund Interest Rate in Post Office

The current Public Provident Fund Interest Rate in Post Office is 7.1% per annum.

Historical Public Provident Fund Interest Rate in Post Office

The aAnnual interest rate is not fixed. It is determined by the Central Government of India from time to time. The interest rate is announced on a quarterly basis now.

PPF account compounds annually and interest is credited to the account at the end of the financial year.

How to open a PPF Account?

You can open PPF( Public Provident Fund) either online or offline. PPF online can be activated by visiting bank portal.

For online account opening you can visit the portal of chosen bank or post office.

The following documents are required to open the PPF Account:

Following documents are required to open PPF account 

1. KYC documents for verifying the identity of the person such as Aadhar card,Driver’s licence or Voter ID etc.
2. PAN Card
3. Residence Address Proof
4. Form for nominee declaration
5. Passport size photograph

PPF Account Tax

PPF offers tax benefits U/S 80 C of the Income Tax Act of 1961. PPF offers an EEE advantage. You can deposit 1.5 lac in a financial year to get the tax benefit.– PPF account is attractive because interest is tax-free and even maturity is also tax-free.

Post Office Public Provident Fund Calculator

FAQs

Is PPF rate of interest constant or fixed?

PPF rate of interest is fixed for a certain duration only. Every quarter PPF interest rate is specified by GOI. It may or may not change or remain fixed for certain duration.

Can husband and wife both have PPF?

Both husband and wife can open separate PPF account. But joint account is not permissible.

Can I open separate PPF Account for my wife?

yes, you can open separate PPF Account for your wife.

How much money will I get after 15 years in PPF?

Assuming a constant interest rate of 8%, post completion of 15 years you will get around Rs 44 lakh ( if you deposit Rs 1.5 lac per financial year).

What if I invest 5000 in PPF for 15 years?

If I invest 5000 in PPF for 15 years on yearly basis @8% per annum, you will get near about Rs.1.47 lac and if you deposit Rs 5000 on monthly basis for 15 years then the maturity amount will be Rs. 17 lac.

Is PPF better than FD?

Please refer Is PPF better than FD?

Can I have 2 PPF accounts?

No. One person can open only one PPF account. However one can open another account if were to open the account as an guardian to a minor child.

Is PPF tax Free?

PPF Offer EEE advantage. Which means when you deposit money – you get tax deduction u/s 80C.

How to Plan Your Investment?

You can always work with a Certified Financial planner and plan your finances, including Emergency funding, building a corpus for house purchase, and taking care of your health needs so that you can plan a better retirement income in your second inning, leading to a more secure and financially stable retirement.

If you have learned something new and found the article informative, Then please share & Comment. This will help me reach more readers and spread financial awareness.