5 things to teach your kids about money

5 things to teach your kids about money

Children, these days, are much smarter and more informed than their parents at their age. They seem to be much in touch with what’s going around them. Then why leave out money management? The biggest gift that any parent can give their child is to teach them how to handle money and sadly enough this isn’t a part of the curriculum at most schools.

On this Father’s day, we bring you 5 simple actionable tips on how and what to teach your kids about money. 

(more…)

Best investment options for NRIs

7 best investment options for NRIs in India

As per statistics, there are nearly 3 crore NRIs and PIOs from India who live in different parts of the world. NRIs are always on the lookout for various investment options in India because of the increasing potential that the Indian economy holds. Many NRI investors believe that investing in their home country can help in wealth creation while also providing a boost to the country’s economy. 

As the Indian political and economic environment remains stable, foreign investment continues to flow into the country. The world too keeps a close eye on the movements in the Indian market because of the estimated scope for growth. Here, we will provide an overview and guidance on NRI investments in India, along with discussing some benefits to be availed from the same.

(more…)

What is portfolio rebalancing?

All that you should know about portfolio rebalancing

Risk management plays an important role in setting up an effective portfolio irrespective of an investor’s style or approach towards investment. Many investors take risk management seriously and proactively realign their portfolios to prevent the significant impact of market fluctuations. This is when portfolio rebalancing comes into the picture as it plays an extremely important role in the investment approach of an investor.

Here, we will explore the concept of portfolio rebalancing and unravel some of the important aspects surrounding it. This will help investors to learn the concept and also implement it in their day-to-day portfolio construct.

(more…)
Goal based investing

What is Goal Based Investing?

Goal based investing
Home » Personal Finance & Investing » Financial Planning

What is Goal-Based Investing?

The first question that a majority of investors have in mind is, ‘How much money will I get?’. This is true for most of us, however, as investors, we should ask, ‘How will the investment help in achieving the financial goals I have?’. If we ask this, we are working towards goal-based investing. Goal-based investing focuses on investing our hard-earned money through a structured financial plan.

We will discuss goal-based investing and how this concept can help generate wealth for investors in the long run.

What is Goal-Based Investing?

The reality of the Indian investment market is that most investors invest:

  • For tax-saving
  • Due to peer pressure
  • An advisor or agent within the family coaxes one to invest

Goal-based investing is a novel concept in India since most investors allocate their funds to bank FDs, mutual funds, equity stocks, real estate investment, etc. They hardly realize that saving money does not help in achieving any concrete financial goals.

Goal-based investing is more like a philosophy that can help in identifying, quantifying, and designing an action plan for achieving various financial goals. The idea is to achieve a goal instead of chasing returns from financial investments. A financial goal could be buying a house, foreign tour, higher education, marriage expenses, setting up a retirement corpus, etc.

Why should we consider Goal-Based Investing?

Here are some of the key benefits that can be availed through goal-based investing:

  • Disciplined investment: Goal-based investing encourages disciplined investment through monthly SIPs, periodic portfolio rebalances, etc. 
  • Limit debt usage: As you plan for your financial goals in advance, you can limit your debt usage which you would have used for annual vacations, purchasing a vehicle, home investment, etc.
  • Tax planning: Holistic tax planning is one of the outcomes of goal-based investments. As you plan for 80C deductions in advance, you can avoid making random and hasty investments just for the purpose of saving tax.
  • Planning & saving: With goal-based investing, you can keep a close watch on every small and big expense which helps in increasing your savings as you continue to reduce non discretionary spending.
  • Financial Safety: Through goal-based investing, you can plan in advance and attain financial security for your future.

Examples of Goal-Based Investments 

Goal Investment Description
Emergency funds Fixed Deposit, Liquid Funds The emergency fund requirement can be calculated using total monthly expenses X 6 months.
Home Investment Mutual Fund SIP, 

SIP – Blue chip Stocks

Aim for accumulation of amount equalling 20-30% of the value of home.
Education Mutual Fund SIP, 

SIP – Blue chip Stocks

If this is for children’s education needs, ideally savings should be from the time the child is young + investments made in SIPs.
Retirement SIP – Blue chip Stocks Aim for systematic savings while you are employed and generating returns for a secure future.
Car Purchase Fixed Deposit, 

Recurring deposit

Through planned investments, you will have sufficient savings to purchase a car and don’t have to rely on loans.

Things to Consider Before Starting Goal-Based Investing

To get your goal-based investing right, you must consider some rules and follow them as far as possible. Here, we have provided some of the top rules to keep in mind:

  • Be clear with your goals—Identifying your goals and the corresponding time horizon is essential to begin with. You must be sure about your goals and should not keep switching goals to get the most out of goal-based investing. 
  • Accuracy is key—Having approximate estimates, or unclear numbers can cause digression from your goals. For instance, if you are considering foreign education for your child, try to talk to peers about their experiences, specific capital requirements, etc. As per the time horizon chosen, always incorporate the rate of inflation while calculating an investment goal.
  • Have a clear figure for investing – Always be clear about your capability to save and invest depending on your income, monthly expenses, existing loans, other commitments, etc. 
  • Check the rate of return of investments—While calculating the rate of return on a mutual fund, always check for the weighted average of returns. The rate of return of most investments is based on the estimated compounded annualized growth rate (CAGR).
  • Select equity exposure–You can consider investment exposure in both equity and debt instruments to achieve your investment goal. For longer-term goals, equity exposure bodes well. Calculate your equity exposure as per your investment horizon.
  • Check your risk appetite—Your risk-taking ability can have a heavy influence on the selection of investment instruments and portfolio structuring. While investing in ULIPs, for instance, you can invest more in equity funds if you have a high-risk appetite and a long-term horizon. For short-term goals, you can focus more on debt-oriented funds.
  • Periodic review—Try to review your investment portfolio frequently to ensure that it is on track to achieve the set goals. At any time, you can switch funds and also use top-up investment options for higher returns, in case your portfolio performance has been good.

Conclusion

To succeed in goal-based investing, you must have the right mindset, patience, and consistency throughout your investment journey. Convert strategy into a discipline as far as investments are concerned. When in doubt, always ask yourself, “What am I saving or investing for”. 


Related Posts

All that you should be aware of Indexation benefit

As per the tax structure of our country, an investor gets the benefit of indexation on the long term gains from debt mutual […]

What is KYC? Why is it important?

Financial markets today face a larger threat of suspicious activities that have a significant negative impact. As financial crimes continue to deeply impact […]

Best Debt Funds

Mutual funds are fast becoming one of the most preferred investment options for new and also seasoned investors. Investors look for diversification and […]

Managing your finances with us is a tap away

Join lakhs of users and discover what’s possible with your money

Finity on Play Store Finity on iOS App Store

How to Invest for Retirement? and Why is it necessary to start investing early?

Description :

To know more about mutual funds: Visit Finity wealth website: https://finity.in Or Download android app: https://bit.ly/2OMEWvn Download ios app: https://apple.co/2PVqN2C

TRANSCRIPT:

Hey, everyone, my name is Dipika Jaikishan and I’m from Finity.

A topic very close to my heart is a topic of investing towards our retirement. So how many of you have already started investing or even though about investing for your retirement a fact to know that the earlier you start the better it is. And is not a cliche statement I am making factually the earlier you start the little investment that you’ll start making at that point of time help you build a larger corpus towards your retirement.

People, unfortunately, tend to start thinking about their of building retirement savings to close to their retirement. I know a case where people at 55 or 50 and wanting to retire at 60 something strikes and think hey I don’t think I might have enough savings towards my retirement. Let’s discuss how savings towards our retirement can be done very well.

 

So how much should you save towards your retirement?
I think its important to know that the retirement corpus or retirement savings for each person vary for instance I might choose I want to retire at the age of 60 post which I want to take a good vacation every year while my friend might think that he wants to retire at the age of 60 and wants to live a frugal lifestyle than on. Your retirement corpus also depends on what your current state of expenses are , current quality of living whether by the age of 60 by the time your retired you’ve already achieved or already met other financial objectives such as childrens education etc..

With a lot of people in India now choosing to have a children their mid or late 30s the high possibility is that you would go in to your retirement with some or the other kind of loan on your head.

My strong suggestion to you would do no thave Debt when you go into retirement or wait until you’ve covered all your deb till you retire.

 

So how much should you save towards your retirement?
M thought would be put down your current expenses, put down your expenses in terms of which are fixed, which are variable a which you see may not reoccur at the time of retirement.

For instance when you retire your insurance premium may not be valid at that point of time. And I would also assume that you possibly paid off your own loan etc.. Whatever the value that might be in today’s term I would suggest to inflate that number about 8% by the time you retire and look at that number. For instance, I would take my case I current expenses are about Rs.70,000 without any real liability but yes some odd insurance premium.

If I would have chosen to retire 30 years later than 70,000 would be close to about 2 and a half or 2.8 lakhs this number would vary for each one of us and there are several calculators available online for you to go an evaluate how much you might need.

 

So how much should you save for your retirement?

Let’s take into consideration 3 cases here.
Since I am a Bollywood fan I’m gonna call these 3 guys as Amar, Akbar, and Antony.

There is Amar who says you know what now I have 10 years left to my retirement I’m earning really well and I can afford to put aside 15,000 per month towards SIP into a mutual fund for y retirement. Then there is Akbar who says you know what I have 20 years left towards my retirement left me to do about 7500 per month for this purpose.
And the last poor guy Antony whos probably earning 20 to 25000 a month who says you know what I can’t afford very much I’m going to do 5000 a month for the next 30 years towards my retirement.
I’d have to look at each of their corpuses with the experience of time all have them have been invested 18 lakh Rs. but their return are stringily different.
If I have to show some numbers to you Amar’s value towards the end of tenure is about 3500000. Akbar’s is about 7500000. And Anton’s is about 1.75 crores what happened there!

A very simple concept that we learned in standard 8th compounding. Compounding apparently is called 8th wonder of the world those who understand it earn it those who don’t pay for it.

Now its left to you what do you do. Save towards your retirement and realize a bit to late an pay for it.

I’m asked several time wether mutual funds are the right savings instrument for retirement?

Let me put situation out here to you, let’s assume you’ve already been working for 10 to 15 years which mean you already have a certain investment that is accumulated in your Employee Provident Fund which is 24% of your basic in most cases.

Then in more often then not we have some of the other kind of endowment policy which is again a fixed return investment.
Keeping both these scenarios in mind both of them are fixed return investment between 7% – 9 % where do you get a higher interest from?
in most cases, these investments only help us match inflation never beat inflation. And if we are looking to build huge retirement corpus we actually need to beat inflation.

My strong suggestion to you would be that if you have more than 5 years towards your retirement start it today, build some amount of investment towards retirement corpus. Identify the funds that you will not touch until retirement and liquid it for a vacation or any odd expense you might regret later.

Sukanya Samriddhi Yojana

Investments for Wealth Generation

What is Sukanya Samriddhi Yojana?

Sukanya Samriddhi Yojana (SSY) is an Indian Government initiative with the objective to provide for the welfare of girl children.

It was launched on January 22, 2015. The current interest rate is 8.5% and can be opened by parents or guardians of girls below the age of 10.The minimum investment amount required is Rs.1000.

This scheme is eligible for tax exemptions on deposits, maturity amount and the interest earned. Premature withdrawal before the girl attains 18, is not permissible. However, SSY comes with a lock-in period of 8 years.

Specially meant for parents having a daughter and want to provide for her future goals by investing regularly for a long term.

Parents with a higher risk appetite willing to expose investments to equities with the hope to yield higher returns in the long run.

  • Equity Mutual Funds 
  • Direct Stock Investing

Highlights

  • RiskThe scheme is risk-free.
  • ReturnsThe current interest rate is 8.5% (compounded annually). The rates are revised quarterly hence making it applicable for all subscribers.
  • TaxationPopularly known for its “Exempt-Exempt-Exempt (EEE)” status. The deposits, interest earned and the maturity amount is tax free.
  • Lock-in LimitationsThe SSY account matures post 21 years from the date of account opening. (Minimum lock-in period is 8 years)
  • WithdrawalsUntil the girl turns 18 years, premature withdrawals are not permissible.
  • Capital ProtectionIt is a Government scheme so the capital is adequately secure.
  • Inflation ProtectionWhen inflation is above interest, the account earns no real returns.

Investment Goal

It is an Indian Government initiative with the objective to motivate parents to save for the future of their girl child and make provision for her goals and needs.

Download Finity app to get more returns

Invest in Direct Mutual Funds with zero commissions and no fees

Overview

FeatureDescription
Eligibility

  • Indian Resident

  • Parent or legal guardian of the girl child.


Entry AgeParents or legal guardians can open this account only if the girl child is 10 years or less.
Fee Structure (Account Opening Fee & Maintenance Charges)

  • Requires a minimum deposit of Rs.1000, failing which the account shall be deactivated and can be revived after paying a penalty sum of Rs. 50.

  • The upper limit is Rs. 1.5 lakh (multiple deposits are allowed).

  • Maximum of two accounts for two different girl child.

  • A third account can be opened by the guardian if twin girls are born at second birth or 3 girls are born at the first birth.


InterestThe current interest rate is 8.5% .
TenureMinimum lock-in period is 8 years. However the account matures post 21 years from the date of account opening.
Exit OptionPremature closure is allowed only in the event of unfortunate death of the girl child.
Account Holding CategoriesGirl child below 10 years through the parents or legal guardian.
Nomination facilityNot available.

Capital & Inflation Protection

Since this scheme is backed by the Indian Government, the capital is adequately safe.

No inflation protection.

Guarantees

The interest rate currently is 8.5% and the rates are revised quarterly hence making it applicable for all subscribers.

Liquidity

  • SSY comes with a minimum lock in period of 8 years and withdrawals are not permissible until the girl turns 18.
  • Closure of the account takes place only in case of untimely death of the girl child.

Tax Implications

  • Best known for its tax status “Exempt-Exempt-Exempt”, i.e. the deposits, interest earned and the maturity amount is free form tax.
  • Under Section 80(C) of the Income Tax Act, the investment amount receives deductions up to Rs. 1.5 lakh yearly.

Account Setup Information

Where to open?

The account can be opened at:

  • Any post office in India providing savings bank service.
  • Any Central Government authorised branch of a commercial bank .

 

How to operate?

The following documents are required for the account opening process:

  • Birth Certificate of the girl child
  • Parent or guardian’s address and Identity Proof such as: PAN, Aadhar Card, declaration of Form 60 or 61, Driver’s License, Voter’s ID or Ration Card. (Carry originals of ID proof during account opening for verification purpose.)

Online Access

Restricted online access.

Key Takeaways

  • The scheme is backed by the Government of India, specifically for the welfare of girl children.
  • The account has a minimum lock-in period of 8 years.
  • The investors can enjoy tax exemptions on the deposits, interest earned and maturity amount.
  • The account also receives tax deductions under Section 80(C) up to Rs.1.5 lakh.

Invest in Direct Mutual Funds to get better returns

Senior Citizen Savings Scheme

Investments for Wealth Generation

What is a Senior Citizen Savings Scheme?

The Senior Citizen Savings Scheme (SCSS) is a savings scheme backed by the Government of India with the intention to provide guaranteed retirement income for senior citizens.

The current interest rate is 8.7% per annum but these rates are revised by the Indian Government every quarter. The capital is completely protected, having said that, this scheme does not ensure inflation protection.

Premature closure or withdrawal are subjected to penalties that vary between 1-1.5%. You can start investing in SCSS with a minimum investment of Rs. 1000 and make sure to build a reliable retirement corpus.

Specially meant for senior citizens seeking guaranteed regular returns from savings.

Those not looking for regular income.

  • Systematic Withdrawal Plan from debt oriented mutual Funds 
  • Pradhan Mantri Vaya Vandana Yojana
  • Annuity Plan of a life insurance company
  • Post-office monthly income scheme

Highlights

  • RiskThe scheme is risk-free.
  • ReturnsThe scheme currently offers an interest rate of 8.7% p.a. and is lined with G-sec rates.
  • TaxationThe invested amount receives tax deduction up to Rs.1.5 lakh as per Section 80(C).
  • Lock-in LimitationsHas a  lock-in period of 5 years and can be extended for another 3 years.
  • WithdrawalsWithdrawal is permissible post one year of account opening and varies between 1-1.5% based on account tenurity.
  • Capital ProtectionIt is a Government scheme so the capital is highly safe and reliable.
  • Inflation ProtectionWhen inflation is above interest, the account earns no real returns.

Investment Goal

It is an Indian Government initiative for the senior citizens with the objective to provide guaranteed returns every quarter, thereby building a regular and assured income flow.

Download Finity app to get more returns

Invest in Direct Mutual Funds with zero commissions and no fees

Overview

FeatureDescription
EligibilityThe account holder must be an Indian Resident.
Entry Age

  • Must be of 60 years.

  • Those retired under voluntary or superannuation basis, must be 55 years old.

  • No age limit for those retired from defence services provided they fulfill certain conditions.


Fee Structure (Account Opening Fee & Maintenance Charges)The minimum amount required to open a SCSS is Rs. 1000. The upper limit is Rs. 30 lakh for a joint account and Rs. 15 for a sole account. (Deposits should be in multiples of Rs. 1000)
Investment
InterestThe current interest rate is 8.7% p.a. The rates are revised quarterly.
Tenure5 years with an extension of another 3 years.
Exit OptionPremature closure is subjected to penalty.
Account Holding Categories

  • Sole /Joint Account

  • Multiple accounts are permitted

Nomination facilityThis provision is available.

Capital & Inflation Protection

Since this scheme is backed by the Indian Government, the capital is highly safe and secure.

There is no protection when the rate of inflation is more than the rate offered by the senior citizen savings scheme. Hence the account earns no real returns.

Guarantees

The interest rate currently is 8.7% per annum, however, the government revises the rates quarterly. Once the investor has made his deposit, the interest (in line with G-secs of similar maturity and a spread of 1%) won’t change during the tenure. SCSS has quarterly interest payouts.

Liquidity

Premature withdrawal or closure is allowed after one year of account opening but is subjected to penalty that varies between 1-1.5% based on account tenurity.

  • 1.5% of the deposit is deducted as penalty if the account is closed after 1st year but before the 2nd year.
  • 1% of the deposit is deducted as penalty if the account is closed on or after the 2nd year.

Tax Implications

  • Under Section 80(C) of the Income Tax Act, the investment amount receives deductions up to Rs. 1.5 lakh per annum.
  • The interest earned is fully taxable.
  • If the income exceeds Rs. 10,000 in a financial year then it is subject to TDS (tax deducted at source).

Account Setup Information

How to open?

The account can be opened at any head or general post office and several branches of designated nationalized bank like Bank of India, Dena Bank and Canara bank to name a few. The only private sector bank to provide SCSS facility is ICICI bank. The following documents are required for the account opening process:

  • Account opening form.
  • Passport size photographs – two
  • Aadhar card or acknowledgement of application in its absence.
  • Address and Identity Proof such as: PAN, Aadhar Card, declaration of Form 60 or 61, Driver’s License, Voter’s ID or Ration Card. (Carry originals of ID proof during account opening for verification purpose.)

Online Access

Online access is possible by linking your online bank account with a bank offering SCSS.

Key Takeaways

  • The scheme’s interest rates are aligned with G-secs of similar maturity and does not provide inflation cover.
  • Transfer of interest to savings account is permissible through Electronic Clearance Service (ECS).
  • You can port the account from one bank to another.
  • The account receives tax deductions under Section 80(C) up to Rs.1.5 lakh.

Invest in Direct Mutual Funds to get better returns

Kisan Vikas Patra

Investments for Wealth Generation

What is a Kisan Vikas Patra?

Known as KVP, the Kisan Vikas Patra is a small savings scheme backed by the Government of India. As the name suggests, this initiative was made with the objective to raise money for the welfare schemes that benefit farmers.

The current interest rate is 7.7% and is compounded yearly. It is known for its feature of doubling the investment amount in 118 months.

It has a minimum lock-in period of 30 months and allows premature encashments. The major drawback of this scheme is that, it does not have tax benefits and no assured protected from inflation.

Risk averse investors looking for steady returns through lump sum investments.

Investors looking to earn high returns by having equity exposure in their long term investments.

  • Equity Mutual Funds 
  • Company Deposits
  • Direct Stock Investing
  • Bank Fixed Deposits
  • RBI Savings Bonds

Highlights

  • RiskThe scheme is risk-free.
  • ReturnsThe scheme currently offers an interest rate of 7.7% (compounded yearly)
  • TaxationThere is no tax benefit.
  • Lock-in LimitationsThe minimum lock-in period is 30 months.
  • WithdrawalsCost are applicable on premature withdrawals
  • Capital ProtectionIt is a Government scheme so the capital is highly safe and reliable.
  • Inflation ProtectionWhen inflation is above interest, the deposit earns no real returns.

Investment Goal

It is initiative by the Indian Government for the conservative investors to double the invested deposit. It is a easy option for investors with a low risk appetite as it is backed by the government and provides guaranteed returns.

Download Finity app to get more returns

Invest in Direct Mutual Funds with zero commissions and no fees

Overview

FeatureDescription
EligibilityThe account holder must be an Indian Resident.
Entry AgeNo age barriers.
Fee Structure (Account Opening Fee & Maintenance Charges)

  • You can start KVP account with just Rs. 1000.

  • No upper limits

  • Available denominations for certificates are Rs.1000, Rs.5000, Rs. 10,000 and Rs.50,000)


InterestThe current interest rate is 7.7% (compounded yearly).
Tenure118 months
Exit OptionEarly closure is permissible only if a predetermined value of KVP is paid.
Account Holding Categories

  • Sole /Joint Account

  • Minor through a guardian.

  • Can be purchased by two adults.

Nomination facilityThis provision is available for existing investors.

Capital & Inflation Protection

Since this scheme is backed by the Indian Government, the capital is highly protected.

There is no inflation protection because the account earns no real returns when the inflation rate is more than the rate offered by Kisan Vikas Patra.

Guarantees

The interest rate currently is 7.7% (compounded yearly) and is guaranteed. The rates are quarterly notified according to the government- bond rates. Once the investor has made his deposit, the interest won’t change during the tenure.

Liquidity

  • Early closure is permissible only if a predetermined value of KVP is paid.
  • It has minimum lock-in period of 30 months post which encashments are permissible, but are subjected to penalty.
  • Loans are also offered, however conditions do apply.

Tax Implications

The scheme scores less on taxability. It provides not tax advantages on both the deposit or the interest earned. There is no TDS.

Account Setup Information

How to open?

The account can be opened at any head or general post office, designated nationalized banks or SBI and its associate banks. It requires the following documents:

  • KVP application form (receivable at the post office).
  • Carry originals of ID proof during account opening for verification purpose.
  • Choose a nominee

Online Access

This facility is not available.

Key Takeaways

  • If you have obtained transfer rights to the required bank or post office, you can encash KVP at any post office or nationalised banks.
  • KVP are portable across post offices and designated banks.
  • The current interest rate is 7.7% and is aligned to G-secs.

Invest in Direct Mutual Funds to get better returns

Pradhan Mantri Vaya Vandana Yojana

Investments for Wealth Generation

What is a Pradhan Mantri Vaya Vandana Yojana?

A pension plan for senior citizens, the Pradhan Mantri Vaya Vandana Yojana (PMVVY) is the brainchild of Indian Prime Minister Narendra Modi.

This scheme provides assured returns with a interest rate that varies between 8% to 8.3%.It also provides loans, however this facility is made available after the policy has completed 3 years.

In the case of critical illness you can opt for premature closure and get 98% of your deposit refunded. In the event of death, the amount is given to your beneficiary.

Specially meant for senior citizens seeking guaranteed regular returns from savings.

Those not looking for regular income.

  • Annuity Plan of a life insurance company
  • Post-office monthly income scheme
  • Systematic Withdrawal Plan from debt oriented mutual funds 
  • Senior Citizens Savings Scheme

Highlights

  • RiskThe scheme is risk-free.
  • Returns:  The scheme offers an interest rate between 8% – 8.3%.
  • TaxationThere is no tax benefit.
  • Lock-in LimitationsHas a tenurity of 10 years.
  • Capital ProtectionIt is a Government scheme so the capital is highly safe and reliable.
  • Inflation ProtectionNo inflation security.

Investment Goal

It is an initiative by the Indian Prime Minister Narendra Modi for the senior citizens. It is a easy option for investors with a low risk appetite as it is backed by the government and provides guaranteed returns. Principal is given back after the term ends.

Download Finity app to get more returns

Invest in Direct Mutual Funds with zero commissions and no fees

Overview

FeatureDescription
Entry Age60 years or above.
Fee Structure (Account Opening Fee & Maintenance Charges)

  • Minimum amount for investment is Rs. 1.5 lakh

  • The upper limit is 15 lakhs


InterestBetween 8%- 8.3%
Tenure10 years
Exit Option98% of the deposit is refunded in the event of premature closure due to critical illness. Amount is given to beneficiaries in case of death.
Account Holding CategoriesThe maximum investment amount of 15 lakh is applicable for the investor, spouse and dependents added together.

Capital & Inflation Protection

Since this scheme is backed by the Indian Government, the capital is highly protected.

There is no protection from inflation.

Guarantees

The interest rate ranges between 8% – 8.3%. and is guaranteed. PMVVY allows monthly, quarterly and annual payouts. You avail 8.3% return if you opt for annual payout.

Liquidity

  • Available only after 3 years of policy completion.
  • 75% of deposit is the maximum loan permissible (interest rate for the loan is decided at periodic intervals).
  • For the loan sanctioned until 30th April, 2018, the interest rate applicable is 10% p.a. paid out half-yearly for the entire term of the loan.

Tax Implications

The scheme scores less on taxability. It provides not tax advantages on both the investment or the interest earned.

Account Setup Information

How to open?

You can open your PMVVY account by visiting LIC office.

Online Access

To invest online, go to www.licindia.in.

Key Takeaways

  • This option in open for applications till March 2020 .
  • It is a scheme backed by the Government so the capital is safe, but it provides no inflation protection.
  • Annual payouts help you get to returns up to 8.3%.
  • You can buy PMVVY through LIC (support online facility).

Invest in Direct Mutual Funds to get better returns

RBI 7.75% Savings Bonds

Investments for Wealth Generation

What is a RBI 7.75% Savings Bond?

Launched in 2003, the RBI 7.75% Savings Bond is a taxable savings for conservative investors who want to lock their returns for 7 years with a fixed interest rate of 7.75%. They are also known as Government of India 7.75% Savings (Taxable) Bonds.   

This scheme provides guaranteed returns that help investors to save money for a defined period. You can start your investment with just Rs. 1000 (has no upper limits).

Liquidity and tax implications on this instrument score low. The tenure of 7 years is fixed and no exit option is allowed. The interest and the invested principal receive no tax deductions.

Risk averse investors looking for steady returns through lump sum investments.

Investors wanting high returns by having equity exposure in their investments.

  • Company Deposits
  • Balanced Mutual Funds 
  • Bank Fixed Deposits

Highlights

  • RiskThe scheme is risk-free.
  • ReturnsThe scheme offers an interest rate of 7.75%.
  • TaxationThere is no tax benefit.
  • Lock-in LimitationsThe minimum lock-in period is 7 years.
  • WithdrawalsYou cannot take loans against this bond. They are neither listed nor traded.
  • Capital ProtectionIt is a Government bond so the capital is highly safe and reliable.
  • Inflation ProtectionThere is no inflation protection.

Investment Goal

It is initiative by the Indian Government for the conservative investors to encourage savings and ensure that there are no reductions in their interest rates.

Download Finity app to get more returns

Invest in Direct Mutual Funds with zero commissions and no fees

Overview

FeatureDescription
EligibilityA Indian Resident or Hindu Undivided Family (HUF).
Entry AgeNo age barriers.
Fee Structure (Account Opening Fee & Maintenance Charges)

  • Minimum investment amount of Rs. 1000. (units also issued in multiples of Rs.1000)

  • No upper limits

InterestThe guaranteed interest rate of 7.75%
Tenure7 years
Exit OptionPremature closure is not permissible.
Account Holding Categories

  • Sole /Joint Account

  • Minor through a guardian.

Nomination facilityThis provision is available.

Capital & Inflation Protection

Since this bond is backed by the Indian Government, the capital is highly protected.

No inflation protection.

Guarantees

The interest rate is 7.75%. It is either compounded yearly or is paid half-yearly, as per the convenience of the investor.

Liquidity

  • Cannot take loans against these bonds.
  • They are not listed or traded in the security market.
  • Premature encashment or closure is not permissible. You can move out of this bond only upto its maturity.

Tax Implications

The scheme scores less on taxability. It provides no tax benefits on the principal invested or the interest earned.

Account Setup Information

How to open?

The bond can be bought from nationalized banks or branches of SBI and other RBI specified banks.

Key Takeaways

  • Fixed interest rate of 7.7.5% for 7 years.
  • It is a Government bond so your capital is safe, however this bond doesn’t protect you from inflation.
  • You require a minimum amount of Rs. 1000 to begin your investment.
  • Minors can invest through a guardian.

Invest in Direct Mutual Funds to get better returns