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Where to invest money?
Now days in the market so many options available for investment. According to investment plan we should decide which option is suitable for us. Because some plans give short term returns and some are long term. Below are the some investment plans which are giving confirm returns and also safe.
Investment Plans |
| Public Provident Fund (PPF) |
| Fixed Deposits (FD) in Bank |
| National Saving Certificate (NSC) |
| Share Market |
| Mutual Funds |
| Other options |
Public Provident Fund (PPF)
PPF account is very safe because it is organized by Govt of India. In PPF account we can deposit minimum of Rs. 500 and maximum of Rs. 70000 in a year. PPF account can be opened in head post office, elected banks branches. Lock in period for PPF is 15 years.
Public Provident fund or simply PPF is a scheme introduced by the Government of India in 1968 under which any citizen of India can make a contribution to the scheme by which he/she can claim a income tax rebate under appropriate Income tax laws.
Only Individuals are eligible to invest in the public provident fund. If the individual is a minor, an individual corresponding to the minor can make a contribution to the scheme.
The duration of the scheme is of 15 years but can be extended for 1 or more terms of 5 years. The PPF account can be terminated at any time but further contributions to the scheme later can only be made once 15 year term is over.
Investment amounts
A minimum amount of Rs.500 can be made per annum and any further amount can be made in multiples of Rs.5 subject to a maximum of Rs.70000 per annum.
Interest rate calculation
The interest rate for your PPF account is calculated on every 31st of March at 8%. This interest rate is calculated based on the minimum amount that exists in your account between 5th of March and 31st of March.
So one should not withdraw any part of the PPF amount between March 5th and 31st if the Interest rate is to be fully utilized.
Tax benefits
The Interest accrued from PPF is completely exempted from the Income Tax under section 88 of IT Act.
And any amount that is to be credited is also fully exempted from wealth tax.
Loan facility
Loans of up to 25% of the balance at the end of 1st financial year from 3rd to 6th year can be taken. Next loan can be taken once the first loan is completely paid off.
Withdrawal policy
Withdrawal of PPF amount is not possible for the first 5 years. From the 6th year you can withdraw amount from your account but that can be made only once in a financial year.
If the account is extended beyond 15 years, up to 60% of the balance at the start of the extended period can be withdrawn.
You can contact your bank or the Post office branch or any body in which you opened the account at any time to know the status of your PPF account.
Like wise, if you want to see the status of your PPF account and have your account in SBI or its subsidiaries, contact your branch to add the PPF account to your existing Online banking account and also ask to give you the transacting rights so that you can view, check your account status and pay your PPF online.
~ The worst of PPF
1. The interest rate keeps changing
It was initially 12% per annum, dropped to 11%, then 9.5% and is now 8%. This rate of interest is fixed by the government and there is nothing you can do about it.
How to make this work for you: If the interest rate on PPF declines, interest rates on all other deposits (company and bank) and bonds also declines. So, frankly, there are no other alternative fixed-return investments that can compete because, overall, the interest rates are declining.
2. Lengthy lock-in period
Fifteen years to be exact. But, in actuality, it works out to 16 years since the last contribution is made in the 16th financial year.
Even if you make an investment on the last day of your account (the day it is due to mature), you will still get a tax rebate. But, of course, you will not earn interest on that amount on the last day.
How to make this work for you: Use this as a retirement planning tool. Money you will never touch. If you are just 22, you will get the money when you are around 38. You can use it to prepay your housing loan then.
3. Interest is calculated on the lowest balance
Interest is calculated on the lowest balance between the fifth and the last day of the month of March.
Let's say you have Rs 100,000 in your PPF account and on the 10th, you deposit an additional Rs 10,000. Your interest will be calculated on Rs 100,000 (not Rs 110,000).
How to make this work for you: If making a last minute deposit at the end of the financial year, do so before March 5.
4. Lack of liquidity
Your money is stuck for years on end. It is not as easy as selling some shares or mutual fund units.
How to make this work for you: Take a loan from the third year of opening your account to the sixth year. So if the account is opened during the financial year 1997-98, the first loan can be taken during financial year 1999-2000 (the financial year is from April 1 to March 31).
The loan amount will be up to a maximum of 25% of the balance in your account at the end of the first financial year. In this case, it will be March 31, 1998.
You can make a partial withdrawal only after five financial years are completed from the end of the year in which the initial subscription was made. So, in effect, it works out from the seventh year onwards.
The amount of withdrawal is limited to 50% of the balance in your account at the end of the fourth year immediately preceding the year in which the amount is to be withdrawn; or at the end of the preceding year, whichever is lower.
For example, if the account is opened in 1993-94 and the first withdrawal is made during 1999-2000, the amount of withdrawal will be limited to 50% of the balance as on March 31, 1996, or March 31, 1999, whichever is lower.
~ So should you?
Definitely. It is one of the best long term investment options around, in safety, tax rebates and return!
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Fixed Deposits (FD) in Bank
FD is one of the safest investment in India. Depend on the period banks are giving the returns. So many public and private banks in market so competition is also. Due to this competition many FD sachems and facilities giving by banks. It is very safe because all banks working under reserved bank of India.
| Fixed Deposit Rates in Public Sector Banks | |||||||||||||
| Bank Name | 15-29 Days | 30-45 Days | 46-60 Days | 61-90 Days | 91-120 Days | 120-179 Days | 180-270 Days | 271-364 Days | 1-2 Years | 2-3 Years | 3-5 Years | Up to 5 Years | With effect from |
| Allahabad Bank | 5.00 | 5.50 | 6.50 | 6.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.50 | 10.00 | 10.50 | 11.00 | 1-4-99 |
| Andhra Bank | 5.50 | 5.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.50 | 9.50 | 10.00 | 10.50 | 11.00 | 11.00 | 1-4-99 |
| Bank of Baroda | 5.00 | 5.00 | 6.00 | 6.00 | 6.00 | 6.00 | 7.00 | 7.00 | 8.00 | 9.51 | 10.50 | 10.50 | 5-4-99 |
| Bank of India | 5.00 | 5.00 | 5.50 | 6.50 | 6.50 | 6.50 | 7.00 | 7.00 | 8.00 | 9.50 | 10.00 | 10.00 | 21-7-99 |
| Canara Bank | 5.00 | 5.00 | 6.00 | 6.00 | 6.50 | 6.50 | 7.50 | 7.50 | 9.00 | 9.50 | 10.00 | 10.00 | 16-8-99 |
| Central Bank | 5.00 | 6.00 | 6.50 | 6.50 | 7.00 | 7.00 | 8.50 | 8.50 | 9.50 | 9.50 | 10.50 | 10.50 | 12-3-99 |
| Dena Bank | 6.00 | 6.00 | 6.25 | 6.25 | 6.75 | 6.75 | 7.75 | 7.75 | 9.00 | 10.00 | 10.50 | 10.50 | 9-8-99 |
| Indian Bank | 5.00 | 5.00 | 7.00 | 7.00 | 8.00 | 8.00 | 8.50 | 8.50 | 10.00 | 10.50 | 11.00 | 11.00 | 17-5-99 |
| Indian Overseas Bank | 5.00 | 5.00 | 6.00 | 6.00 | 7.50 | 7.50 | 8.00 | 8.00 | 9.50 | 10.00 | 10.50 | 10.50 | 1-4-99 |
| Oriental Bank | 5.00 | 5.00 | 6.50 | 6.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.50 | 10.00 | 10.5 | 10.5 | 1-4-99 |
| Punjab & Sind Bank | 6.00 | 6.00 | 6.50 | 6.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.50 | 10.00 | 10.5 | 10.5 | 18-5-99 |
| State Bank of Hyderabad | 5.00 | 5.00 | 6.50 | 6.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.50 | 9.50 | 10.50 | 10.50 | 15-3-99 |
| State Bank of India | 5.00 | 5.00 | 5.50 | 5.50 | 5.50 | 5.50 | 7.00 | 7.00 | 9.00 | 9.50 | 10.50 | 10.50 | 15-3-99 |
| State Bank of Mysore | 5.00 | 5.00 | 5.50 | 5.50 | 5.50 | 5.50 | 7.00 | 7.00 | 9.00 | 9.50 | 10.50 | 10.50 | 5-3-99 |
| S.B.T | 5.00 | 6.00 | 6.50 | 7.00 | 8.00 | 8.00 | 8.00 | 8.00 | 9.00 | 10.00 | 10.50 | 10.50 | - |
| Syndicate Bank | 5.00 | 5.50 | 7.00 | 7.00 | 7.25 | 7.25 | 8.00 | 8.00 | 10.00 | 10.50 | 11.25 | 11.25 | 15-3-99 |
| U.B.I | 5.00 | 5.00 | 6.00 | 6.50 | 7.00 | 7.00 | 8.00 | 8.00 | 9.00 | 10.00 | 10.5 | 10.5 | 1-4-99 |
| North Malabar Grameen Bank | 5.00 | 7.00 | 8.00 | 8.00 | 10.00 | 10.00 | 10.00 | 10.00 | 10.50 | 11.00 | 11.00 | 12.00 | 1-12-99 |
| Vijaya Bank | 5.00 | 6.00 | 7.00 | 7.00 | 8.00 | 8.00 | 9.00 | 9.00 | 9.50 | 10.50 | 11.00 | 11.00 | 8-3-99 |
| Fixed Deposit Rates in Private Sector Banks | |||||||||||||
| Name of the Bank | 15-29 days | 30-45 Days | 46-60 Days | 61-90 Days | 91-120 Days | 120-179 Days | 180-270 Days | 271-364 Days | 1 -2 Years | 2 - 3 Years | 3 - 5 Years | Up to 5 Years | With effective from |
| Bank of Madura | 5.50 | 6.50 | 6.50 | 7.50 | 8.50 | 8.50 | 9.50 | 9.50 | 10.00 | 10.50 | 11.00 | 11.00 | 16-8-99 |
| Centurion Bank | 6.50 | 8.00 | 8.25 | 8.50 | 9.25 | 9.25 | 10.25 | 10.25 | 10.50 | 11.25 | 11.25 | 11.25 | 24-6-99 |
| City Union Bank | 5.00 | 6.00 | 7.00 | 8.00 | 9.00 | 9.00 | 10.00 | 10.00 | 10.50 | 10.50 | 10.00 | 10.00 | 1-6-99 |
| Global Trust India | 6.50 | 8.00 | 8.00 | 8.00 | 9.25 | 9.25 | 10.00 | 10.00 | - | - | 11.25 | 11.50 | 18-8-99 |
| H.D.F.C Bank | 5.00 | 8.00 | 8.00 | 8.00 | 9.00 | 9.00 | 10.00 | 10.00 | 10.00 | 10.00 | 10.00 | - | 10-4-99 |
| I.C.I.C.I Bank | 5.00 | 6.00 | 7.00 | 7.00 | 8.00 | 8.00 | 10.00 | 10.00 | 10.50 | 10.50 | 10.50 | 10.50 | 1-8-99 |
| I.D.B.I. | 5.00 | 8.00 | 8.00 | 8.00 | 9.00 | 9.00 | 9.50 | 9.50 | - | - | 10.50 | - | 21-8-99 |
| IndusInd Bank | 5.50 | 8.00 | 8.00 | 8.00 | 9.00 | 9.00 | 10.00 | 10.00 | - | 11.25 | 11.25 | 11.25 | 2-8-99 |
| Lord Krishna Bank | 5.50 | 5.50 | 8.00 | 8.00 | 8.00 | 8.00 | 9.50 | 9.50 | 11.25 | 11.25 | 11.25 | 11.25 | 1-5-99 |
| Tamilnadu Mercantile Bank | 6.00 | 6.00 | 7.50 | 7.50 | 9.50 | 9.50 | 10.50 | 10.50 | 11.00 | 11.00 | 11.50 | 11.50 | 7-5-99 |
| Catholic Syrian Bank | 6.00 | 6.00 | 8.00 | 8.00 | 8.50 | 8.50 | 9.00 | 9.00 | 10.00 | 10.50 | 11.00 | 11.00 | 19-4-99 |
| Dhana lakshmi Bank | 7.00 | 7.00 | 8.00 | 8.00 | 9.00 | 9.00 | 9.50 | 9.50 | 10.50 | 11.00 | 11.50 | 11.50 | 1-9-99 |
| Federal Bank | 5.00 | 5.00 | 7.00 | 7.00 | 7.50 | 7.50 | 8.00 | 8.00 | 9.50 | 10.00 | 10.75 | 10.75 | 1-9-99 |
| J.& K. Bank | 5.50 | 5.50 | 7.00 | 7.00 | 9.25 | 9.25 | 10.00 | 10.00 | 10.25 | 10.50 | 11.00 | 11.00 | 15-12-99 |
| South Indian Bank | 5.00 | 5.00 | 7.00 | 7.00 | 7.50 | 7.50 | 8.50 | 8.50 | 9.50 | 10.25 | 10.75 | 10.75 | 15-9-99 |
| Nedungadi Bank | 6.00 | 6.00 | 8.00 | 8.00 | 9.00 | 9.00 | 10.00 | 10.00 | 10.50 | 11.50 | 11.50 | 11.50 | 1-4-99 |
| Vysya Bank | 5.75 | 5.75 | 7.25 | 7.25 | 8.25 | 8.50 | 9.00 | 9.00 | 10.50 | 10.75 | 11.00 | 11.00 | 2-8-99 |
| Times Bank | 6.00 | 8.00 | 8.00 | 8.00 | 9.00 | 9.00 | 10.00 | 10.00 | 10.5 | 10.5 | 10.5 | - | 16-8-99 |
| U.T.I. Bank | 5.50 | 8.00 | 8.00 | 8.00 | 9.00 | 9.00 | - | - | - | - | 11.5 | 11.5 | 1-5-99 |
National Savings Certificates (NSC)
National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at all post office counters in the country. It is a long term safe savings option for the investor. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years.
Features:
* NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 for a maturity period of 6 years. There is no prescribed upper limit on investment.
* Individuals, singly or jointly or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent.
* One person can be nominated for certificates of denomination of Rs. 100- and more than one person can be nominated for higher denominations.
* The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer. They can also be transferred from one post office to another.
* One can take a loan against the NSC by pledging it to the RBI or a scheduled bank or a co-operative society, a corporation or a government company, a housing finance company approved by the National Housing Bank etc with the permission of the concerned post master.
* Though premature encashment is not possible under normal course, under sub-rule (1) of rule 16 it is possible after the expiry of three years from the date of purchase ofcertificate.
* Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88.
Who can Invest
* An adult in his own name or on behalf of a minor
* A trust
* Two adults jointly
Denomiations and Limit
National Savings Certificates are available in the denominations of Rs. 100 Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for you to decide how much you want to put in the NSCs. This is of course a huge benefit for you can decide as much as your budget allows.
Maturity
Period of maturity of a certificate is six years. Presently interest paid is 8 % per annum half yearly compounded. Maturity value of a certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.
| Year | Rate Of Interest |
| 1 Yar | Rs 81.60 |
| 2 Year | Rs 88.30 |
| 3 Yea | Rs 95.50 |
| 4 Yea | Rs 103.30 |
| 5 Yea | Rs 111.70 |
| 6 Yea | Rs 120.80 |
Share Market
Invest in share market is another option. Some time it gives best returns and some time not. So depend on the market conditions you should be invest. Also you have good knowledge of share market.
Some of the Terms used in Share Market
What is a share ?
In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage of the word share alone to refer solely to stocks is so common that it almost replaces the word stock itself.
In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.
A company's stock price reflects what investors think about the stock, not necessarily what the company is "worth." For example, companies that are growing quickly often trade at a higher price than the company might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.
Quick Facts on Stocks and Shares
* Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues
* Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no guarantee of any returns and can lose value, even in the long run
* Investments in stocks can generate returns through dividends, even if the price
How does one trade in shares ?
Every transaction in the stock exchange is carried out through licensed members called brokers.
To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .
What is Demat Account?
Demat refers to a dematerialised account.
Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode.
If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application.
It is, however desirable that you hold securities in demat form as physical securities carry the risk of being fake, forged or stolen.
Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks.
HOW TO OPEN A DEMAT ACCOUNT ?
Opening an individual Demat account is a two-step process: You approach a DP and fill up the Demat account-opening booklet. The Web sites of the NSDL and the CDSL list the approved DPs. You will then receive an account number and a DP ID number for the account. Quote both the numbers in all future correspondence with your DPs.
So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.
Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more.
So a demat account is a must for trading and investing.
Most banks are also DP participants, as are many brokers.
You can choose your very own DP.
To get a list, visit the NSDL and CDSL websites and see who the registered DPs are.
A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients.
A DP will just give you an account to hold those shares.
You do not have to take the same DP that your broker takes. You can choose your own.
Stock Options
A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). Thus it is a contract to buy (known as a "call" contract) or sell (known as a "put" contract) shares of stock, at a predetermined or calculable (from a formula in the contract) price.
It is Having the Rights to purchase a corporation's stock at a specified price.
Infact There are two definitions of stock options.
1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies.
2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration.
Employee stock options are stock options for the company's own stock that are often offered to upper-level employees as part of the executive compensation package. An employee stock option is identical to a call option on the company's stock, with some extra restrictions.
Performance Stock Options are Options that vest if pre-determined performance measures are achieved. The performance goal (revenue growth, stock-price increases…) must be reached for the options to be exercisable or for the vesting to be accelerated
What is online Stock & Trading?
Online Stock Trading is a recent way of buying and selling stocks. Now you can buy and sell any stock over the Internet for a low price and you don’t need to call up a broker.
You can buy any stock and sell any stock and it doesn’t take much to get started.
All you need is a brokerage account. A broker that I use is Scottrade http://www.scottrade.com/ and you can start an account with them for $500 and their commissions are only $7, so they are not expensive at all.
Once you have setup a brokerage account you then need to choose an investment method and then research different companies and then buy stock in the ones that you feel will go up because they are good sound companies.
So as you can see there are several benefits to online stock trading but let’s recap.
With online stock trading all you need is $500 to open a brokerage account, the brokerage commissions are low at Scottrade they’re only $7 and you can buy and sell your stocks from your home computer anytime that the stock market is open.
Well now that you know that you can do online stock trading with a minimal investment you should get started today and then start learning about the stock market and choose the stocks you want to invest in.
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Mutual fund
Mutual fund investment is safe rather than share. Mutual Fund companies collect money from investors and invest in share market. Top
Other
Gold, Real Estate, Health Insurance, Debentures or Bonds etc. Top