Start Investing Guys…..

That’s what currently I am saying to every other guy I meet.

First, you all have started earning and obviously spending..
But guys now is the time when u start saving some of the
amount for your future. Only saving doesn’t work because
you just cant save your money in a bank account and get a
return of mere 3.5% on it. Make your money work as hard as
you work. This can be done only by investing your money in
various instruments available. I would just like to focus on
these instruments available for investments. I would give a
fair idea about all these instruments what they say, how
they work, tax saving or not, etc etc….

I will be providing this information to all you guys in a form on

weekly newsletter, which you will receive in you inbox on
every Friday. Thus you get the weekend to read it and plan
your investments into it.

Ideally it is said that one should save at least 30% of his/her

income. But when we are bachelor we obviously can save
a amount greater than this. At least I think so. If you can
save beyod 30% its very good, if not atleast stick to 30%.

Now guys the first thing I tell to anybody is to open a Public

Provident Fund (PPF) account. PPF is finest instrument for
getting fixed returns over a very long period of time.
Actually for some it will not make any sense to plan for such
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a long term from right now, its ok for them but I still suggest
them that open a PPF account. The details of the PPF
account are as follows

PUBLIC PROVIDENT FUND - 1968

This scheme was introduced by Central Government in
1968. The Scheme enables the members of the public to
make contributions to the Fund and obtain Income Tax
rebate under the relevant provisions of the Income Tax.

Eligibility

Any individual can apply for PPF, or any individual on behalf

of minor can also apply for PPF. Joint accounts are not
permitted.

Minimum / Maximum Investment ( w.e.f. 15-11-2002 )

Minimum Rs.500/- per annum in multiples of Rs.5/-
Maximum Rs.70,000/- per annum
The investment can be lumpsum or in not more than 12
installments in a year.

Duration

 15 years
 Can be extended for one or more blocks of 5
years
 Account can be discontinued but repayment of
subscriptions along with interest only after 15 years.

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Rate of Interest
8% per annum credited in account on 31st March every
year calculated on the minimum balance between 5th day
and end of the month. Interest is not contractual but rate is
notified by Ministry of Finance, Govt. of India, at the end of
each year.

Loans
Loan upto 25% of balance at the end of first financial year
from third to sixth year. Second loan can be taken on full
payment of first loan.

Withdrawals
Only one withdrawal allowed during any one year from sixth
year. Withdrawal limited to 50% of the balance at the credit
at the end of 4th year preceding the year in which the
amount is withdrawn or the end of the preceding year
whichever is lower.

The account extended beyond 15 years; partial withdrawal

allowed up to 60% of the balance to the credit at the
commencement of the extended period.

Tax Benefits

 Benefit available u/s 80c of the I.T. Act.

 Interest totally exempt from Income Tax.
 Amount standing to the credit is fully exempted
from Wealth Tax.

Some other information about PPF is as follows…

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  You guys can open this PPF account at any Post Office
or at any Nationalised Bank.

 No premature closure is allowed except in case of

death.

 The account holder can continue to hold the amount

in the account after maturity without any furthur
contributions, the amount will earn intrest untill account
is closed and can be withdrawn at any point.

 One single withdrawl is allowed in the above case.

 PPF account is trasferable from one Post Office branch

to another, or from one Bank to another, or from Post
Office to Bank and vice versa.

This is the link for application form for opening PPF account

http://www.indiapost.gov.in/pdfForms/PPFActOpening.pdf

Above are all the details which one has to know. Let me
explain them in simple terms. This is to work out for very long
term as the minimum tenure is for 15 years. Now say that we
all are 22/23 year old then if you open an account today
then you will be getting the money at the age of 37/38. Put
a fixed amount of money from your salary in this account
monthly, keeping in mind it dosent exceed Rs.70,000/-
annualy.

For ex. Lets say from next month you are willing to put
Rs.5000/- every month in this account then at the end of 15
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years approx Rs.16,88,000/- that’s a huge amount right?? It’s
the magic of compounding. Below is the link where you can
actually calculate what you will be getting… work it out to
get some magical figures…….

http://www.utimf.com/customer_services/tools/grow_saving
.aspx#

So after 15 years this amount can be used for anything you

want lets say prepaying your home loan, your childrens
education etc etc…..

Now lets see at a larger view, say you have enough income
in future to meet the above expenditures, then we can
convert this instrument as a part of your retirement planning.
You can extend PPF for 5 years terms. If you plan to retire at
55, you can just go on extending the term and then get the
whooping amount at your retirement. Even if u continue the
first said amonut of Rs.5000/- every month till you are 55 that
will work out to amount of Rs. /- approx.

So now the first thing you have to do is apply for PPF

account in your nearest post pffice r nationalised bank.

Any queries regarding PPF are welcome at

cchopade.fp@gmail.com

Happy Investing 

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