Investment Schemes You Must know Before Investing Money

Money Investment Schemes

Every investment avenue carries an inherent risk, involving market fluctuations, swinging stock indices, changes in currency valuations, or economic policies. Every investment also varies in terms of maturity terms, interest rates and exposure to risk. To reap maximum benefits on your investment, you can consider diversifying your investment portfolio.

For those looking to stabilize their investment portfolio, now is the right time to invest in Fixed Deposits, especially as FD interest rates are at an all-time high. However, you may also want to compare other tax-saving and income-generating avenues like NSC, PPF, SSSS and SSY.

Read on to know more about different investment avenues, so you can decide which ones to include in your investment portfolio for safe growth and tax benefits too.

Public Provident Fund (PPF)

Interest gains

You can expect to earn 8% interest returns on your PPF investment at present.

Tax exemptions

Unlike FDs or other investment avenues, both your investment and interest returns from PPF are completely exempt of tax. This is because PPF enjoys an EEE status, which can enable you to claim an exemption of up to Rs.1.5 lakh in a financial year under Section 80C of the Income Tax Act when you invest in PPF.

Timeline

When you do a comparison of PPF vs. FD in terms of maturity, you will see that while you can choose your payout frequency and the tenor for FDs, you have less flexibility with PPF.

Here you will have to continue with your investment for up to 15 years. Moreover, you can stretch it for another 5 years upon maturity if you like.

Premature withdrawal

You can partially withdraw funds from your PPF 5 years after starting your investment up to 50%.

Investment corpus

You can start a PPF investment with just Rs.500 and can invest up to Rs.1.50 lakh per year. Treat your investment like a monthly scheme and put in any amount you want in multiples of Rs.500. In order to keep your account active, you must deposit a minimum of Rs.500 every year.

Risk exposure

This instrument is right for risk-averse investors as it offers returns as per the fixed interest set every year.

Fixed Deposit

Interest gains

Interest on your FD investment varies with the issuer you choose. When you apply for Fixed Deposit with reputed issuers like Bajaj Finance then you can benefit from high-interest FD rates of up to 8.75% as a regular investor and up to 9.10% as a senior citizen on a 36-month FD with returns at maturity. Additionally, earn an extra 0.25% on your FD renewal. Use the FD monthly interest rate calculator to forecast your earnings to achieve your goals with ease. Also, enjoy the highest ICRA rating and CRISIL rating when you choose the Bajaj Finance FD.

Tax exemptions

Your investment in 5-year tax-saving FDs allow you to claim exemption of up to Rs.1.5 lakh. However, the interest earnings on FDs are treated as income from other sources and thus attract both TDS and taxes as per your income slab. Owing to the recent Interim Budget proposals, your FD interest earnings from bank and post office deposits will attract deductions only when your gains exceed Rs.40,000 during one financial year for regular investors and Rs.50,000 for seniors.

Timeline

You can choose a flexible tenor for your FD based on your goals. Issuers generally have a vast range of options starting from 7 days to 5 years.

Premature withdrawal

You can break your FD anytime you want by paying a small penalty, which may be a percent of your interest earnings. However, if need be, you can also pledge your FDs to avail a loan in order to fund emergencies.

Investment corpus

You can start an FD using a small sum. For instance, in case of a Bajaj Finance FD, you can start your investment with just Rs.25,000.

Risk exposure

FDs are assured investment options offering fixed income. When choosing a company FD, ensure you check the CRISIL or ICRA rating to ensure that the FD is reliable.

NSC – National Savings Certificate

Interest gains

You can expect to earn 8% interest returns on your investment at present.

Tax exemptions

Like PPF, NSC offers exemptions up to Rs.1.5 lakh on your investment per financial year. While the returns here don’t attract TDS, the income is taxable as per your slab. What you should remember however, is that since your interest earnings from the first year are reinvested, this amount also qualifies for an exemption under Section 80C as does any fresh investment.

Timeline

NSCs have a tenor of 5 years and 10 years. You can choose a tenor basis your goals and allow your investment to mature through this time to give you a hefty return.

Premature withdrawal

You are not allowed to break your investment before maturity. However, with a court order or in case of a special situation like death of the investor, you can make an emergency withdrawal.

Investment corpus

You can start an NSC with any amount of your discretion. A small investment of Rs.100 is also allowed.

Risk exposure

Sponsored by the government, this savings scheme is a low-risk investment option.

Senior Citizens’ Saving Scheme

Interest gains

You can earn 8.7% interest returns on your investment at present. However, the same is altered every quarter.

Tax exemptions

Your investment in SCSS also qualifies for exemptions up to Rs.1.5 lakh in a financial year like NSC, PPF and the tax-saver FD.

Timeline

SCSS have a tenor of 5 years, which you can extend for up to 3 years.

Premature withdrawal

You are not allowed to break your investment before maturity.

Investment corpus

You can start an SCSS with any amount in multiples of Rs.1,000 up to a maximum of Rs.15 lakh. Your investment in SCSS cannot exceed the funds you will get upon retirement. So, either it needs to be within Rs.15 lakh or within your retirement corpus limit, whichever is lower. Most importantly, you can start your investment with Rs.1 lakh in cash or above Rs.1 lakh in cheque.

Risk exposure

SCSS is a risk-free investment option.

Sukanya Samriddhi Yojana

Interest gains

You can earn 8.5% interest returns on your investment at present.

Tax exemptions

Your investment of up to Rs.1.5 lakh in Sukanya Samriddhi Yojana is allowed for exemption under Section 80C of the Income Tax Act.

Timeline

You can open a Sukanya Samriddhi Yojana account with any registered bank or post office enlisted with the scheme. You are allowed to open separate accounts for up to 2 girls until they attain the age of 10 years. SSY accounts come with a long maturity tenor of up to 21 years. However, you will have to pay at least Rs.250 or a maximum of Rs.1.5 lakh every year for 15 years.

Premature withdrawal

You can withdraw up to 50% of your investment in SSY. But, you cannot make a withdrawal until 5 years of opening the account or before your daughter becomes 18 years old.

Investment corpus

You can invest a minimum of Rs. 1,000 and a maximum of Rs.1.5 lakh every financial year.

Risk exposure

This is also a risk-free option.

Bottom line..

While there are no good or bad investments, some suit your income and goals better than others. So, keeping the above-mentioned investments and their dynamics in mind, choose a options to create a diversified portfolio. Understand that as you sow, so shall you reap in the time to come!

About Sashi 84 Articles
Sashi Singh is content contributor and editor at IP. She has an amazing experience in content marketing from last many years. Read her contribution and leave comment.

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