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Old 28th September 2012, 16:27   #286
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Originally Posted by alter.e.go View Post
I have never really invested in Company Fixed deposits (always in Bank FD's).
But the interest rates are a little higher for Company deposits.

Anything to be wary of.
Unlike bank deposits, these are not insured.
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Old 9th October 2012, 21:16   #287
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Ok - I just found out something nice. Not sure if you guys know it.

Cooperative Bank don't deduct TDS. (If you purchase their shares), 25 shares one bank told me. Additionally you'll get 12% dividend on those shares.

Beautiful!
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Old 9th October 2012, 22:08   #288
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Originally Posted by alter.e.go View Post
Ok - I just found out something nice. Not sure if you guys know it.

Cooperative Bank don't deduct TDS. (If you purchase their shares), 25 shares one bank told me. Additionally you'll get 12% dividend on those shares.

Beautiful!
Not quite! There is a saying in financial markets: If it is too good to be true, it isn't true.

Do you know that Co-operative banks are one grey area and they are not as regulated as any other financial institution?

Do you know that Co-operative banks carry the highest risks of defaults?

Please stay away from Co-operative Banks, if you value your money.
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Old 9th October 2012, 22:15   #289
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Originally Posted by lapsi View Post

Do you know that Co-operative banks carry the highest risks of defaults?

Please stay away from Co-operative Banks, if you value your money.
If your deposit + interest is below 1 Lakh, it's covered by insurance. So you will get it back even if the bank crashes - it may take a little time though.
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Old 9th October 2012, 22:54   #290
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Originally Posted by lapsi View Post
Not quite! There is a saying in financial markets: If it is too good to be true, it isn't true.

Do you know that Co-operative banks are one grey area and they are not as regulated as any other financial institution?

Do you know that Co-operative banks carry the highest risks of defaults?

Please stay away from Co-operative Banks, if you value your money.
Interesting.

I have heard the below names. for as long as I am alive. This 'risk of default' - how many have have actually gone under, that we know about ?

Kapole Co-operative Bank
Bharat Co-operative Bank
Shamrao Vithal Co-operative Bank
Saraswat Co-operative Bank
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Old 10th October 2012, 00:08   #291
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Alter.e.go
Hi
The first 2 viz Kapol and Bharat do no have as wide a reach as Saraswat.
I too would personally avoid the the cooperative banks as far as FDs are concerned.You are insured upto a lakh of rs. but getting that will take time and effort.
A few years back if the bank had not paid the insurance premium you were not covered.The bank branches used to put up the premium paid on their notice board.Now that has changed.
Quite a few have gone under because of the loan defaults the recent high profile banks being Global Trust(taken over by Oriental Bank),Madhavpura,South India coop etc
Incidentally when Barings bank collapsed it was more than 300 years old.
Best thing is to stick to the nationalised banks.
Regards
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Old 10th October 2012, 00:20   #292
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Originally Posted by carboy View Post
If your deposit + interest is below 1 Lakh, it's covered by insurance. So you will get it back even if the bank crashes - it may take a little time though.
If your deposit amount is below 1 lakh, your interest will be below ten thousand and TDS will not be deducted in any case.


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Originally Posted by faustus77 View Post

Best thing is to stick to the nationalised banks.
I completely agree with you. If you want to invest in a bank FD, stick to Nationalised Banks.


Quote:
Originally Posted by alter.e.go View Post

This 'risk of default' - how many have have actually gone under, that we know about ?
It is a matter of principle. I do know of banks that have defaulted. And if you are invested in it, even one bank defaulting is a harrowing experience.

Anyway, this is just my professional opinion. You need not accept it.


Quote:
Originally Posted by sindabad.sailor View Post
I am about to open PPF account for wife and daughter with ICICI bank.

Any pointers rgd this? Any advantages over opening with a nationalised bank?

Rgds.
I have based my reply on the following assumptions:
  1. I am assuming that your daughter is a minor.
  2. She does not earn her own independent income.
  3. You have your own PPF account. If you do not have an account, start one for yourself first, even if you have EPF.
Please ensure that the total deposit in the three PPF accounts does not exceed 2 lakhs. Any deposit into a minor's account is considered your deposit. You are entitled to deposit only 1 lakh in your account. Since there are two of you, a deposit upto 2 lakhs in the three PPF accounts will be fine. Deposits in excess of 1 lakh per adult will not earn interest.


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Originally Posted by Mr.Beat View Post
Hello Financial Gurus, i have just started my career and would like to invest around 15k a month in total for the next 12-18 months.
Thumb rules:

Invest in PPF:
This account will be your core retirement fund.

Invest the maximum amount that you can invest in a PPF account all your earning life. The first time you open a PPF account, it is for 15 years. Thereafter, you can renew it for 5 years every time it comes up for renewal. There is no limit on the number of renewals of a PPF account.

Never close a PPF account. Never withdraw anything from a PPF account till you retire unless it is to invest in a property. Once you retire, you can withdraw the interest earned in the earlier year, once a year. This will ensure life-long income from this source.

If you start depositing in PPF from the time you start your first job, then by the time you retire, the annual interest from a PPF account will be a very decent amount. Do your own calculations and find out


Buy Term Insurance.
This is a low cost, pure risk policy. It only covers risk. Buy it online. No agent required.

Just like in Mediclaim, you do not get any return in a Term Insurance policy. Do not go to an insurance company for investments.

Take enough cover, so that in case you die during your working life, the post-tax interest from the insurance amount should be able to replace your income. Take additional Term Insurance to cover any loans that you have taken.


Buy a Mediclaim policy:
Take an adequate health insurance cover.


Do NOT think about tax exemptions:
These things need to be done, irrespective of whether you get any tax benefit on any part of it.

An example: If your Term Insurance is 20,000 do not deposit only 80,000 in PPF since the limit U/s. 80C is 100,000. Pay for your Term Insurance and deposit the maximum in PPF.


Feel free to ask questions.

Last edited by lapsi : 10th October 2012 at 00:49.
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Old 10th October 2012, 05:50   #293
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Originally Posted by lapsi View Post
Thumb rules:

Invest in PPF:
This account will be your core retirement fund.

Invest the maximum amount that you can invest in a PPF account all your earning life. The first time you open a PPF account, it is for 15 years. Thereafter, you can renew it for 5 years every time it comes up for renewal. There is no limit on the number of renewals of a PPF account.

Never close a PPF account. Never withdraw anything from a PPF account till you retire unless it is to invest in a property. Once you retire, you can withdraw the interest earned in the earlier year, once a year. This will ensure life-long income from this source.

If you start depositing in PPF from the time you start your first job, then by the time you retire, the annual interest from a PPF account will be a very decent amount. Do your own calculations and find out
Couldnt agree more on this. The key is to start early and invest maximum possible in PPF.
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Old 10th October 2012, 10:22   #294
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Default Re: Income Tax savings, Investments and Insurance

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Originally Posted by lapsi View Post

Invest in PPF:
This account will be your core retirement fund.

Invest the maximum amount that you can invest in a PPF account all your earning life. The first time you open a PPF account, it is for 15 years. Thereafter, you can renew it for 5 years every time it comes up for renewal. There is no limit on the number of renewals of a PPF account.

Never close a PPF account. Never withdraw anything from a PPF account till you retire unless it is to invest in a property. Once you retire, you can withdraw the interest earned in the earlier year, once a year. This will ensure life-long income from this source.

If you start depositing in PPF from the time you start your first job, then by the time you retire, the annual interest from a PPF account will be a very decent amount. Do your own calculations and find out



Buy a Mediclaim policy:
Take an adequate health insurance cover.


Do NOT think about tax exemptions:
With due respect to your opinions I differ on PPF and Mediclaim.

PPF: PPF(and NSC) is one of the worst instruments for any purpose. More complicated an instrument is more is the distance one needs to maintain. For example PPF account is full of clauses an rules and has a lockin of 15 years, difficult to transfer(why is it required to transfer in first place), cannot be operated from other branches etc etc.
Secondly Its always easy to hand over money to govt or govt organizations but getting it back takes its own sweet time. Some may say longer lockin is good but smaller consecutive lockins is much better than a 15 year lockin in PPF. As it provides better liquidity. I would rate Tax saving Bank FDs better than PPF for the simple reason that banks are much better in handling money than any other institution because its their core business and that is all they do!!! If one favors PPF lockin for lack of discipline in one's self regarding savings and investment then it cannot be argued, in that case one should look for instruments with even longer lockins. PPF returns are constantly being played around by govt and there is no guarantee that they won't be reduced, thus one is at the mercy of govt for the rate of interest once you have put your money in. Last and not the least- Less the number of places you have spread you money the better, because in the unfortunate case of one's death one's successors have to deal with less number of institutions. If you have ever dealt with this situation(god forbid if you have to) then you would know what I am taking about, each and every institution will make you run all over the city for getting different affidavits, certificates, attestations, signatures and visiting head offices. Therefore in my opinion the investments should be routed through banks and DMAT account as much as possible and into less complicated instruments. Also number of bank account one holds should be minimal.

Mediclaim- this is a concept borrowed from west but our industry and its regulators have not yet matured enough to provide a real good security and peace of mind due to the inherent lack of ethics, greed and corruption in private healthcare sector. The "financial experts" on various TV channels keep harping about the need to have health insurance and that too individual ones for each member, should therefore be taken with a pinch of salt as it is usually related to their bread an butter. However it works in case of emergencies and accidents so one should be cautious not to spend too much on it. For example there are Health insurance products in the market that promise to cover even the consultation and OPD fees but how easy will it be to cover it in reality through insurance is anybody's guess.

Last edited by huntrz : 10th October 2012 at 10:26.
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Old 10th October 2012, 10:28   #295
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PPF is the only instrument in the country where interest is not taxed. This is the biggest advantage of PPF from a tax perspective.
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Old 10th October 2012, 10:45   #296
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Quote:
Originally Posted by alter.e.go View Post
Ok - I just found out something nice. Not sure if you guys know it.
Cooperative Bank don't deduct TDS. (If you purchase their shares), 25 shares one bank told me. Additionally you'll get 12% dividend on those shares.
This is true. My entire family are shareholders at SVC and they don't deduct TDS. Very useful for parents who do not have to worry about filling in Form 15(G/H) or for non-working people.
http://www.svcbank.com/SerMisShareholders.aspx


Quote:
Originally Posted by lapsi View Post
Not quite! There is a saying in financial markets: If it is too good to be true, it isn't true.
As mentioned above, it is true and I am talking from personal experience.

Quote:
Do you know that Co-operative banks are one grey area and they are not as regulated as any other financial institution?
What function of co-operative bank is not regulated by RBI?

Deposits up to 1 lac are protected for all banks by DICGC
http://www.rbi.org.in/scripts/FAQView.aspx?Id=64

Quote:
Do you know that Co-operative banks carry the highest risks of defaults?

Please stay away from Co-operative Banks, if you value your money.
These are blanket statements which may be taken at face value and that could be misleading.

Not all co-operative banks are at the same level.
Banks like SVC, Shamrao and COSMOS are doing better than the bigger banks, are more customer friendly and providing better rates.

Infact these banks are expanding their operations.
See this link: http://www.thehindubusinessline.com/...cle2085298.ece


Quote:
Originally Posted by lapsi View Post
If your deposit amount is below 1 lakh, your interest will be below ten thousand and TDS will not be deducted in any case.
Even if you interest is more than 10K, TDS will not be deducted if you are a share holder and that facility has been extended to you.
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Old 10th October 2012, 12:26   #297
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Originally Posted by huntrz View Post

With due respect to your opinions I differ on PPF and Mediclaim.
You are most welcome to differ with me. This difference of opinion will bring about greater clarity and understanding. So it is all good . But FYI, I have been in the field since 1983 and not only do I know what I am talking about I have actually seen it happen.


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Originally Posted by huntrz View Post

PPF: PPF (and NSC) is one of the worst instruments for any purpose. More complicated an instrument is more is the distance one needs to maintain. For example PPF account is full of clauses an rules and has a lockin of 15 years, difficult to transfer(why is it required to transfer in first place), cannot be operated from other branches etc etc.
You need to understand that we are living in a country where social security is not provided by the Government. You have to take care of your own retirement needs and medical emergencies. It is advisable to start planning for your retirement from the day you take up your first job.

Forget the rules of the government, I have suggested that you do not withdraw any money at all from a PPF account till you retire with one exception. This period should be a good 35 years. So 15 years is nothing at all. But you still need to read the rules. Withdrawals are possible after six years.

Now most banks have core banking. You can go to any branch and make a deposit in your account from anywhere in India.


Quote:
Originally Posted by huntrz View Post

Secondly Its always easy to hand over money to govt or govt organizations but getting it back takes its own sweet time.
Well, how does 5-15 days sound? Too long a period for you? The actual time taken for even closing an account is more like 5 days and not 15 days.


Quote:
Originally Posted by huntrz View Post

Some may say longer lockin is good but smaller consecutive lockins is much better than a 15 year lockin in PPF. As it provides better liquidity. I would rate Tax saving Bank FDs better than PPF for the simple reason that banks are much better in handling money than any other institution because its their core business and that is all they do!!!
PPF accounts are opened in Banks. Open accounts with online banking facility and you can make your deposits online. No need to go the bank. No need to go to a Post Office.

You do not want liquidity of your Core Retirement Fund. You want all that money in one place where it is visibly growing. Do you know about the power of compounding interest?

How will you create a Core Retirement Fund when your deposits keep maturing and your interest is taxable?


Quote:
Originally Posted by huntrz View Post

If one favors PPF lockin for lack of discipline in one's self regarding savings and investment then it cannot be argued, in that case one should look for instruments with even longer lockins. PPF returns are constantly being played around by govt and there is no guarantee that they won't be reduced, thus one is at the mercy of govt for the rate of interest once you have put your money in.
ha ha It is obvious that you think the interest rate in the economy is not regulated by the Government. Yes, you are at the mercy of Government any which way, in whichever debt instrument you invest in.

So tell me which instrument, other than PPF, gives you 8.6% Tax-Free annually compounded interest and I will advise that instrument.


Quote:
Originally Posted by huntrz View Post

Last and not the least- Less the number of places you have spread you money the better, because in the unfortunate case of one's death one's successors have to deal with less number of institutions. If you have ever dealt with this situation(god forbid if you have to) then you would know what I am taking about, each and every institution will make you run all over the city for getting different affidavits, certificates, attestations, signatures and visiting head offices.
Looks like you have been through some bad experiences in your life. My condolences for whatever you may have gone through.

I am not sure if the point you are making is in favour of PPF or against it. Fill in the nomination form for your PPF account. Have a savings account of your nominee in the same bank. Give details of the bank account of the nominee in your nomination form. Once a person passes away, submit the Death Certificate to the Bank. Money in the PPF account will be transferred to the account of the nominee within 15 days.

You might have had a different experience due to lack of nomination in the account but once you have a nominee noted in your PPF account, there will be no issues.


Quote:
Originally Posted by huntrz View Post

Therefore in my opinion the investments should be routed through banks and DMAT account as much as possible and into less complicated instruments. Also number of bank account one holds should be minimal.
No instrument is as simple a PPF account. Remove the idea that the lock-in is bad and it does not get better than this.


Quote:
Originally Posted by huntrz View Post

Mediclaim- this is a concept borrowed from west but our industry and its regulators have not yet matured enough to provide a real good security and peace of mind due to the inherent lack of ethics, greed and corruption in private healthcare sector.
You seem to have had a bad experience in getting your claim in this too. You will just have to take my word for it that Mediclaim is a necessity.


Quote:
Originally Posted by S_U_N View Post

These are blanket statements which may be taken at face value and that could be misleading.
As I have said earlier, this is just my professional opinion. You need not accept it.


Quote:
Originally Posted by S_U_N View Post

Even if you interest is more than 10K, TDS will not be deducted if you are a share holder and that facility has been extended to you.
I am aware of that but my response was to the point that the FDs are insured upto a sum of Rs. 1 lakh. You can invest higher amounts and get higher interest without TDS, but the entire amount will be without insurance. Your money, your risk.

Last edited by lapsi : 10th October 2012 at 12:52.
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Old 10th October 2012, 12:51   #298
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Please stay away from Co-operative Banks, if you value your money.
Quote:
Originally Posted by alter.e.go View Post
....I have heard the below names. for as long as I am alive. This 'risk of default' - how many have have actually gone under, that we know about ?
What Lapsi says is very true. They are one of the most ill-regulated and ill-monitored financial institutions in the country.

Typically, Co-op Banks are controlled by the Registrar of Co-op's which forces them to fall prey to the political pressure in the state and demands of the employee union. It would be real hard for you to even believe the insider story of Co-op's.

As a thumb rule, Use co-operative banks only to borrow money if they provide you at a lower rate of interest. Never park your hard earned money there. There are better places to put in your money.

BTW, The TDS part should never be a deciding factor when it comes to investing your money. In most cases people who make high value deposits will have taxable income and they can always use the tax credit to pay off their tax liability at the end of the year.
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Old 10th October 2012, 13:23   #299
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Originally Posted by Warwithwheels View Post

Typically, Co-op Banks are controlled by the Registrar of Co-op's.

As a thumb rule, Use co-operative banks only to borrow money if they provide you at a lower rate of interest. Never park your hard earned money there. There are better places to put in your money.

BTW, The TDS part should never be a deciding factor.
Completely agree with you on all the points stated. Thanks for adding them.

Cheers!
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Old 10th October 2012, 13:39   #300
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Originally Posted by lapsi View Post

Now most banks have core banking. You can go to any branch and make a deposit in your account from anywhere in India.

Well, how does 5-15 days sound? Too long a period for you? The actual time taken for even closing an account is more like 5 days and not 15 days.

PPF accounts are opened in Banks. Open accounts with online banking facility and you can make your deposits online. No need to go the bank. No need to go to a Post Office.
Banks and post offices are just an intermediary or a layer. if the money is stuck as often happens with EPF transfers and withdrawals then you have to follow up with the concerned govt office. Banks cant help you much in this case.
Without online transfers its very difficult to deal with PPF in banks as atleast SBI doesn't take deposits for PPF maintained in other branches.

Quote:
Originally Posted by lapsi View Post

You do not want liquidity of your Core Retirement Fund. You want all that money in one place where it is visibly growing. Do you know about the power of compounding interest?

How will you create a Core Retirement Fund when your deposits keep maturing and your interest is taxable?

ha ha It is obvious that you think the interest rate in the economy is not regulated by the Government. Yes, you are at the mercy of Government any which way, in whichever debt instrument you invest in.

No instrument is as simple a PPF account. Remove the idea that the lock-in is bad and it does not get better than this.

So tell me which instrument, other than PPF, gives you 8.6% Tax-Free annually compounded interest and I will advise that instrument.
In a tax saving bank FD you lock the interest rate too for 5 years. PPF rates can be tinkered at will by the govt.

If there is an option of getting same or better return with lesser lockin I will always opt for lesser lockin. I would make a commitment to myself than someone else imposing a commitment on me with my own money. I know that not everyone think this way. Compounding is done in bank FDs too and there is an option to automatically reinvest the amount on maturity. They also offer better and more competitive returns than PPF. Yes interest is taxable but compounding is quarterly.
http://www.ratekhoj.com/fixed-deposi...sortorder=DESC

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Originally Posted by lapsi View Post
You seem to have had a bad experience in getting your claim in this too. You will just have to take my word for it that Mediclaim is a necessity.
No I am just referring to the amount of irregularities involved in mediclaims by hospitals. Over a time it will become a practice and will increase the health care cost to self funded ones too. My point is all we need is a basic cover and not the fancy ones with OPD charges covered.

Last edited by huntrz : 10th October 2012 at 13:43.
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