THE FINANCIAL INSTRUMENTS

INVESTMENT OBJECTIVES

 Liquidity
 Age  Need for Regular Income

 Risk Tolerance
 Tax Liability

Human Life Cycle – Disciplined Planning Income Phase I Phase II Child’s Marriage Child’s Education Housing Phase III Having a Financial Goal is primary to starting a Investment Plan.30 yrs Birth & Education 22 yrs Earning Years Retirement 60 yrs Age . Child birth Marriage 22 yrs 38 yrs Over 25 .

INVESTMENT AVENUES High H i g h Equity Growth Funds Index Balance Funds Funds Don’t Invest here R I S K Income Funds RETURN Aggressive Stance High Liquid Fund Comp FD Sedate Zone P.O. Optimal L o w ## the size of the circle denotes the level of liquidity .

POST OFFICE MONTHLY INCOME SCHEME 5. EQITY SHARES OF LISTED COMPANIES . UNIT LINKED INSURANCE POLICY 8. 8% SAVINIGS BONDS 4. SENIOR CITIZEN SAVING SCHEME 6. NATIONAL SAVINGS CERTIFICATE (NSC) 3. LIFE INSURANCE POLICIES 7.INVESTMENT INSTRUMENTS 1. PUBLIC PROVIDENT FUND 2.

IMMOVABLE PROPERTY 16. FIXED DEPOSITS WITH COMPANIES 14. EQUITY LINKED SAVING SCHEME (ELSS) 11. PAINTINGS . GOLD & PRECIOUS METALS 15. MUTUAL FUNDS 10. JEWELLERY.INVESTMENT INSTRUMENTS 9. TERM DEPOSITS WITH BANKS 12. SAVINGS DEPOSITS WITH BANKS 13.

Investment remains locked for 15 years 8% interest per year.PUBLIC PROVIDENT FUND Very Safe Investment Not so liquid. Compounded Annually Amount Invested is eligible for deduction under section 80C Interest is exempt under section 10. No TDS from interest. No tax when money is received back .

NATIONAL SAVINGS CERTIFICATE Very Safe. Amount invested is eligible for deduction under section 80C. Unless the Government goes bankrupt and defaults. Encashment is not possible till end of three years. there is no chance of losing money Life is six years but can be transferred after one year. Return is 8% per annum compounded half yearly. Thereafter. No tax on reinvestment . Interest is taxable but no TDS. premature encashment is permitted at a discounted rate of interest.

Not transferable and not encashable before end of six years. No tax on reinvestment 5/30/2012 . there is no chance of losing money Life is six years. Very illiquid.8% SAVING BONDS Very Safe. ROI is 8% per annum No tax benefits Interest is fully taxable. TDS applicable. Unless the Government goes bankrupt and defaults.

Interest is fully taxable. No TDS from interest. Life is six years. Can be withdrawn at any time after one year at discounted rates.POST OFFICE MONTHLY INCOME SCHEME Very Safe. . In addition. Unless the Government goes bankrupt and defaults. No tax on reinvestment. 2006. bonus of 10% is payable on maturity only on accounts opened upto 13th February. 8% per annum interest payable monthly. there is no chance of losing money.

No tax benefits Interest is fully taxable. 9% per annum interest payable quarterly. No tax on reinvestment .SENIOR CITIZEN SAVING SCHEME Very Safe. Can be withdrawn at any time after one year at discounted rates. No TDS from interest. there is no chance of losing money Life is five years. Unless the Government goes bankrupt and defaults.

Amount paid as premium is eligible for deduction under section 80C Amount received back on maturity of policy including the accumulated bonus is exempted from tax .LIFE INSURANCE POLICY Quite safe. It is more of a safety net for future. None of the insurance companies have defaulted till date Loan against policy allowed by many companies Not strictly an option for generating income.

there is market related risk of NAV going down Amount paid as premium is eligible for deduction under section 80C Amount received back on maturity of policy including the accumulated bonus is subject to the laws applicable to capital gains .UNIT LINKED INSURANCE PLAN Quite safe. None of the insurance companies have defaulted till date Since part of the money is invested in stock markets.

Short Tem Capital Gains Tax is charged @ 10% Long Tem Capital Gains Tax is exempt from tax . Can be sold on stock exchanges any time and the sale proceeds would be received within a few days Maximum scope for capital appreciation which would differ from one company to another Dividend is exempt from tax under Section 10.SHARES Substantial risk as the prices of shares fluctuate from time to time and are market driven Very liquid.

However.MUTUAL FUNDS Substantial risk as the NAV of units fluctuate from time to time and are market driven In most cases. dividend distribution tax is levied on Mutual Fund companies Short Tem Capital Gains Tax is charged @ 10% Long Tem Capital Gains Tax is exempt from tax . Maximum scope for capital appreciation which would differ from one fund/scheme/plan to another Dividend is exempt from tax under Section 10. Can be withdrawn at any time subject to exit load which varies from scheme to scheme. very liquid.

EQUITY LINKED SAVING SCHEME Substantial risk as the NAV of units fluctuate from time to time and are market driven Lock-in period of 3 years. Can be withdrawn at any time after 3 years. Maximum scope for capital appreciation which would differ from one fund to another Amount invested is eligible deduction under Section 80C for .

Amount invested is eligible for deduction under Section 80C Interest is fully taxable. there is no chance of losing your money Not very liquid.000 per annum.FIXED DEPOSITS WITH BANKS Quite safe. . TDS from interest in excess of Rs 10. No tax on reinvestment. Unless the bank goes bankrupt and defaults. The tenure of the FD would be a fixed period of not less than five years with a scheduled bank No capital appreciation. Only accumulation of interest which gets compounded every year in case of cumulative deposits.

00% 3.50% 4.25% 180 Days 4.50% 5.00% 5.75% 2.00% 3.25% 7.50% 7.00% 3.00% 7.00% 6.50% 5.50% 1 Year 5.00% 7.00% 5.50% .50% 4.00% 7.00% 7.25% 5 Year 7.75% 7.25% 5.75% 3.50% 4.00% 3.50% 3 Year 7.00% 3.00% 6.50% 6.00% 4.50% 8.00% 5.00% 7.50% 7.00% 7.25% 7.25% 6.75% 3.50% 6.25% 3.BANK FIXED DEPOSITS 30 Days ABN AMRO CITI BANK PNB HSBC HDFC BOB INDIAN BANK ICICI IDBI UTI 3.00% 7.25% 6.75% 7.00% 7.25% 7.25% 6.00% 7.00% 5.00% 7.

Deposits are unsecured and if the company goes bankrupt. Liquidity depends on company and it’s policies. Interest is fully taxable. . TDS from interest in excess of Rs 5. the depositor would get last priority in terms of settlement of dues. No capital appreciation. Only accumulation of interest which gets compounded every year in case of cumulative deposits. In many cases.COMPANY FIXED DEPOSITS Not very safe.000 per annum. No tax on reinvestment. can be liquidated at any time but subject to loss of interest.

JEWELLERY. Capital gains tax needs to be paid on sale. However. jewellery and precious stones are generally not viewed from the point of view of investments Not a very liquid investment. GOLD & PRECIOUS METALS Gold is considered to be a safe investment. . Making charges becomes a sunk cost. No tax benefits. now there is option of buying paper gold in exchange traded funds (ETF). However.

However. Transfer of land and house property is a lengthy and complicated process.REAL ESTATE House property and land have traditionally been perceived to be safe investments. there is often a doubt about the validity of the title deed Not very liquid asset. Rent is taxable under the head “Income from House Property”. Tax benefits on repayment of housing loan under Section 80C and 24B Capital Gains Tax applicable on sale. in India. .

the safety of investment in Art cannot be accurately predicted Returns are not very predictable.PAINTINGS The market for paintings is a nascent market in India. It would depend on the trends prevailing and on the popularity of the artist which may keep on changing from time to time. and also in view of the fact that art is very subjective. . At present. Capital Gains Tax is applicable on sale of art pieces. it is very small and from that point of view.

INVESTMENT VS SPECULATION INVESTMENTS LONG TERM MODERATE RETURNS SPECULATION SHORT TERM HIGH RETURNS HIGH RISK BORROWED FUNDS USED USES TECHNICAL ANALYSIS DIVERSIFIED RISK OWN FUNDS USED USES FUNDAMENTAL ANALYSIS .

DISCIPLINED INVESTMENT PLANNING Derivatives & Equity Mutual Funds Income Funds & Real Estate GOI Relief Bonds Bank Fixed Deposits Aggressive Assets Serious Assets Sacred Assets .

MINIMIZE RISKS .MAXIMIZE RETURNS.

vats@yahoo.Thank You MRS.co.in . RICHA VATS E-Mail: richa.

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