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Old 2nd February 2011, 14:37   #121
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^ She is 47.

I did some research on PPF. Other than it being tax saving instrument which is not relevant to me as of now and it being a convenient alternative to EPF, I find following downsides:

1. Lack of liquidity. Withdrawals can be made after 7th year that too in limited amount.

2. Lock in period is 15 years!! and looking at inflation rates.. is the gain at the end of the maturity attractive enough?

3. Interest rate is compounded unlike postal schemes.

PPF looks good for people who will retire after 15 years. My major spending will be done after 6-7 yrs for two marriages. I am young..can put money in other investing instruments and get better liquidity as well. Still I will do some calculations and thinking on it.

here is how it looks on excel sheet if I want 10 Lakhs after 15 yrs:
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Old 2nd February 2011, 15:17   #122
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Originally Posted by ghodlur View Post
Reason for suggesting PPF was the interest rates remain fairly constant since being regulated by Govt of India where as in case of Bank FD's the ROI is subject to change depending on the whims of the bank.
But even if the FD's rate come down, the rate of an FD which you have already booked will not come down. Since current FD rates are higher than PPF rates, FDs are better.

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Originally Posted by ghodlur View Post
Even if @meonbhp starts earning which he needs to do ASAP, PPF would help in tax savings too.
That can be done after he starts earning. Even assuming he starts earning tomorrow, his income for this year upto March will not fall in the taxable bracket - so no point in doing PPF this year. That can be done after he starts earning.

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Also would locking an substantial amount in a FD for a long period of time be justified? He says that he cant lock the money.
Since PPF is less liquid than FD, I don't get your point.

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Originally Posted by meonbhp View Post
Also, is putting some amount (say 4L) in postal scheme Welcome to the Indiapost Web Site a good idea?
The MIS scheme gives 8%. Including the bonus, it works to 8.5%. Since you can get better at banks now, it may be better to do bank FD's now.


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Can I link this to my bank account so monthly interest is credited to my account automatically?
Yes, it can be done.


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Originally Posted by meonbhp View Post
I have heard good things about hybrid funds like HDFC prudence. What is your opinion about it?
Hybrid funds include debt & equity. So equity part is riskier than debt. So even if the debt part is a majority, the equity part gives a small risk. So you have to take a decision here.


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I don't know much about PPF other than that it is an tax saving instrument with moderate returns, lock-in period is 15 yrs and maximum I can invest is 70000 per yr. So how much I will get after maturity?
You will get it compounded annually at the current rate.
The other thing about PPF is that it's interest is tax free unlike FD. But this may or may not make a difference for you. If the FDs are put in your non-working mother's name, her total interest income + pension or whatever else may not cross the minimum tax limit.


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2. Lock in period is 15 years!! and looking at inflation rates.. is the gain at the end of the maturity attractive enough?
You look at the interest rate & decide whether it's attractive enough for you.
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Originally Posted by meonbhp View Post

3. Interest rate is compounded unlike postal schemes.
If you are referring to MIS scheme, then that obviously can't be compounded because you get the interested given to you every month. So how can it be compounded. If you wanted it compounded, this is what you need to do - open a Post Office Savings account also. Let the interest from the MIS go to the post office savings account. If there interest per month is Rs. 1000, then open a Recurring deposit of Rs.1000 at the Post Office to be debited from your postal savings account. So you get compounding.
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Old 2nd February 2011, 15:32   #123
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Invest 40% in 99.5% purity GOLD and NOT from Tanishq. It has good future and will, in any case, give you more returns over a period of 6 to 7 years than any F.D. or any other 'conservative' schemes.
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Old 2nd February 2011, 18:52   #124
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Quote:
Originally Posted by meonbhp View Post
^ She is 47.

I did some research on PPF. Other than it being tax saving instrument which is not relevant to me as of now and it being a convenient alternative to EPF, I find following downsides:

1. Lack of liquidity. Withdrawals can be made after 7th year that too in limited amount.

2. Lock in period is 15 years!! and looking at inflation rates.. is the gain at the end of the maturity attractive enough?

3. Interest rate is compounded unlike postal schemes.

PPF looks good for people who will retire after 15 years. My major spending will be done after 6-7 yrs for two marriages. I am young..can put money in other investing instruments and get better liquidity as well. Still I will do some calculations and thinking on it.

here is how it looks on excel sheet if I want 10 Lakhs after 15 yrs:
meonbhp,

Assuming that you wont be needing this money to run the daily expenses but only in future.
Make 3 FDs of 4 Lakhs each with quarterly interest payment credited into your account.
or
Make 6 FDs of 2 lakhs each with half yearly interest payment in your account.

If you do it such that no 2 FDs are made in same month then you will get interest credited to your account every month.
At 9% rate of interest you should be able to get 9000 each month.

Invest this 9K into high risk instrument like Equity diversified fund with good track record. Your principal will be safe and your money will grow. When you need the money you will only need to break one or more FDs. Rest will remain untouched.

Also I would suggest to keep all this activity online(Online banking and DMAT) as it will provide best flexibility in terms of monitoring, managing, investing and redeeming of the funds.
I would suggest you to stay away from insurance and tax saving products with lockin periods for now. Moreover you can save max of 1Lakh in tax.
Banks are meant to deal with money and post offices for mails. Keep it that way if you don't want surprises and disappointed in future. To give you an example I went to a PO at my hometown to withdraw 30K but couldn't because the PO said I had to intimate them 1 day in advance to make a 'large' withdrawal as this. i had to leave the city that day and had to leave without withdrawing the money. Now I will have to go there wit 2 days atleast to with draw the money. Needless to say the PO account transfers is not as easy as in banks.

Gold is a commodity and like all other commodities it cannot give a guaranteed appreciation, moreover it is not as liquid as FDs/PO deposits and MF units. It is easier to buy gold for money but it isn't as easy to sell gold and get money at market price.

Last edited by huntrz : 2nd February 2011 at 19:24.
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Old 2nd February 2011, 21:15   #125
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Originally Posted by Devrishi View Post
Invest 40% in 99.5% purity GOLD and NOT from Tanishq. It has good future and will, in any case, give you more returns over a period of 6 to 7 years than any F.D. or any other 'conservative' schemes.
Predicting such things is silly. No one knows what will happen & when. Nothing is a certainty. If it were, then then why not put 100% in gold?
Alternately, instead of banks using expensive means of making money like giving out loans, why don't they just use all the money at their disposal to buy gold? i.e. Bank takes fixed deposit from depositors. Puts everything in gold. Gold is guaranteed to give more returns in a period of 6 to 7 years. And the overhead is far less than giving loans, advertising for loans, filling tons of paperwork, collecting installments, chasing defaulters etc. So just buy gold & make a profit on it.

In 1980, gold had a similar run like now. It touched an all-time high of 850$ per oz. Then it crashed to 300$ & remained between 300 to 400$ for many years.

Last edited by carboy : 2nd February 2011 at 21:17.
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Old 3rd February 2011, 12:58   #126
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Quote:
Originally Posted by Devrishi View Post
Invest 40% in 99.5% purity GOLD and NOT from Tanishq. It has good future and will, in any case, give you more returns over a period of 6 to 7 years than any F.D. or any other 'conservative' schemes.
Conservative schemes are my priority as I am in survival mode currently. I have set aside a contingency fund for 6 months. Even that was a stretch for me. I will consider investing some part of my portfolio (~10%) in gold ETFs/E-gold (not physical gold or gold mining companies though) later.


Can anybody tell me how is the option of splitting FDs in different branches and banks such that annual interest from each FD is less than Rs. 10000?

If I invest 4-6L in bank FD on behalf of my mother who is non-working and below 65, will she be eligible to file Form 15G? can the interest be accumulated in our joint account quarterly?
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Old 3rd February 2011, 14:22   #127
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Default re: Income Tax savings, Investments and Insurance

Quote:
Originally Posted by Devrishi View Post
Invest 40% in 99.5% purity GOLD and NOT from Tanishq. It has good future and will, in any case, give you more returns over a period of 6 to 7 years than any F.D. or any other 'conservative' schemes.
Gold may give good returns. But where to sell them later? Banks or post offices don't buy gold.
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Old 3rd February 2011, 21:25   #128
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Originally Posted by meonbhp View Post

If I invest 4-6L in bank FD on behalf of my mother who is non-working and below 65, will she be eligible to file Form 15G? can the interest be accumulated in our joint account quarterly?

Your mom would need to pay tax on it only if her total income (including the interest & every thing else) per year is above 1.9 Lakhs - and this is the current limit. It will be increased.
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Old 4th February 2011, 08:55   #129
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@meonbhp,

I hope you have a PAN card and a KYC done. You will be needing during the investments above 50K. If you dont have one, then you need to get that on priority.
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Old 4th February 2011, 16:04   #130
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Has any one got IFCI infra bond series 2 alloted? Where do you find them in your demat account?
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Old 4th February 2011, 16:57   #131
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@meonbhp,

I hope you have a PAN card and a KYC done. You will be needing during the investments above 50K. If you dont have one, then you need to get that on priority.
+1 to that.

Note that starting Jan 1 2011, all mutual fund investments, irrespective of the amount invested require KYC done.
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Old 7th February 2011, 09:34   #132
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Has any one got IFCI infra bond series 2 alloted? Where do you find them in your demat account?
Yet to receive the bonds in my demat a/c, no clue yet when it will be credited.
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Old 7th February 2011, 10:37   #133
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Hi,
I would like to invest max of 20K/month for achieving a total target sum of 8Lakh. What are the different options i've got and time frame to achieve such an amount. Is MF a good strategy to invest 20K/month? If so, what are the good MFs i can invest for this timeframe where i get better returns compared to FDs?

Thanks in advance.

Regards,
Ramki
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Old 7th February 2011, 13:05   #134
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Hi,
I would like to invest max of 20-30K per year for family medical / health insurance cover.
I am not sure wether it will qualify for IT rabate over and above the savings of 100K in PPF/LIC etc. Any help from bhpians

Thanks in advance.

Regards,
sanagg1
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Old 7th February 2011, 18:29   #135
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Originally Posted by sanagg1 View Post
Hi,
I would like to invest max of 20-30K per year for family medical / health insurance cover.
I am not sure wether it will qualify for IT rabate over and above the savings of 100K in PPF/LIC etc. Any help from bhpians

Thanks in advance.

Regards,
sanagg1
Apart from exemption on 1 lakh, medical insurance is eligible for deduction upto a total of 15K(for covering family and parents) and 20 K if the parents are sr. citizens. However I don't understand what do you mean by "investing" in health cover? Being an insurance it is an expense. Don't end up buying some bundled product and falling for the "investment cum insurance" trap.
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