Which one is a better saving option: NSC, recurring deposit or PPF?
PPF is the best among option without 2nd thought, this is only Investement option which comes under triple EEE(Exempt, Exempt, Exempt) category. That means you will get tax exemption under section 80C, then the Interest you earn is also not Taxable and also the Maturity is totally tax free.So if you invest max limit which 1,50,000/- yearly for 15 yrs(locking period) then would get around 45,00,000/-. if you extend for 5 more years with same investment amount then you would get around 75,00,000/-, If you extend for 5more years(25years) then you would get around 1,20,00,000/-. See below table calculations:Please note that investing lockin period for PPF is 15yrs however you can extend for 5yrs period there after. Also you can some withdraw only after 7yrs(only 50% of 4yrs contribution) if you need.PPF account lots of benefit for that you can visit PostOffice or Some bank's website. The only drawback is that we don't have insurance with this, so please have a Term Plan(Core Insurance) along with PPF.
Has anyone become rich in India by investing in mutual funds for a long term?
Good Question. Do you know this man?Well, I think we all do. He has a fortune of $ 73 billion. He is Warren Buffet.Why am I talking about him?His company has given a return of 22% per annum over time, making him very rich. This return rate doesn’t seem very big, but over time the power of compounding makes a small amount very big.Remember the story of the king who was impressed by the creator of the game of chess and offered him any reward. The inventor only said, give me a rice grain for the first square on the chessboard, 2 for the second, 4 for the 3rd, 8 for the next, and so on, basically double the number of grains as the previous, for all 64 squares. The king agreed, not realising what compounding is.BTW, if you do the math, the number of grains is 18,446,744,073,709,551,615! The king could not pay and lost!Buffet has been investing since he was 14, he is 86 now. That’s 72 years of investing!So can mutual funds in India deliver good returns?Let me show you returns of some equity mutual funds.I have taken funds with a track record of more than 10 years and showing returns since inception.Below is a snapshot of top 5 equity diversified funds and their returns since inception. Each fund is more than 10 years old.Still more data, below is a list of top 5 mid-cap equity funds and their returns since inception.Just to give some more information, Reliance Growth Fund started in 1995, that’s 22 years with a CAGR of 23% p.a.Sundaram Select Mid-cap started in 2002, that’s 15 years of a CAGR of 29% p.a.If you invest long and choose well, yes you can become rich. The data says so.Warren Buffet is rich because he has managed this 22% p.a. for a very, very, very long period.You may not become Warren Buffet, but if you follow some golden rules and let compounding take over. Then yes, you can become rich.To read more:Steps to create an investment plan: https://goo.gl/6u9O61Best way to invest money if you are salaried: https://goo.gl/iCrmWbBest equity funds: https://goo.gl/6VFVCsDisclaimer: The writer is the CEO - Fincash.com, the views expressed here are personal in nature and do not constitute investment advice or recommendation in any way. Please consult a specialist before making any investment decision. Mutual Fund investments are subject to market risks.
If you want to withdraw money from a fixed deposit, can you do it before the maturity period?
Yes, you may, but that will fall under premature withdrawal and you may have to pay a penalty for that. Once you decide to withdraw money from your FD, the bank will calculate the principal amount along with the rate of interest with the help of Online FD Calculator, and then deduct the penalty amount. However, in case of an lock in FD, a bank may refuse a premature withdrawal as per RBI guidelines. Let us have a look at premature penalty. Usually banks charge a penalty of 0.5% to 1% lower interest on FDs which are closed before maturity. This penalty may be waived off by some banks if it is an emergency. A point to be noted here is that the emergencies are not usually well-defined in the terms and conditions, and in fact, the waiver or reduction is applicable on per-case basis. Another option you can explore is taking a loan against your FD.
For Indians in the US, is investing or saving in India better than in the US, because with fluctuating interest rates, inflation, and conversion rates, I am very confused?
Hi, A little bit info about myself. I am a self learned investor and have a decent amount invested in the US and Indian stock market and various FDs too.The advice that you will hear from most financial planners or finance blogs is to diversify your money into bonds and stocks and into multiple sectors. While that is absolutely correct, we Indians have a different situation. We are used to hearing that LIC is a good investment (Its not), FDs are a good investment, etc from our parents/grand parents. My simple advice to you is invest your money in the US and India both.In the US, do it in the following order for you and your spouseContribute to your company's 401K (even if you don’t plan to retire in the US) at least to the amount your company matches. This will help you lower your taxable income. Most companies have lousy mutual fund options, but if your company has low cost funds or have a brokerage account linked, think of maxing it out.Open a Roth IRA, which is an after tax IRA account where your future gains are tax free. The current limit is $5500. Roth IRA account is a more flexible account and you can buy any stock that you want.If you have more than $5500 to invest, invest in stocks or a stock mutual fund with a 3–10 year horizon. I have recommended Vanguard Funds/ETFs to everyone who asked me where to start.Buy at least one ounce of Gold (preferably Canadian Maple Leaf) every six months. Gold helps you diversify furtherIn India, do it in the following orderOpen a NRI account and open a FD at least once a year and make the interest re invested into principal at the end of term, choose the term which gives you the most returnOpen a stock brokerage account the next time you go to India and link your NRI account and start buying small quantities of reputable companies like L&T.Please note that if you invest in India, you have to file taxes in India and report it in the U.S, its not very complicated, your CPA in the US and CA in India can help you do thatThere is no one who knows when rupee will be stronger, when markets are going to crash, when the markets are going to go up, etc. You will see a lot of financial news encouraging or discouraging you to invest, try to tune it out and keep investing for the long term.Hope this helps
Is investing in LIC policy a good decision?
First of all, you should get the point that LIC policy is not for the investment purpose. Its the way to get your life secured over the period of time. If you are looking at LIC as an investment purpose, then you are putting your money in the wrong basket. The money that we receive on maturity of policy along with some bonus amount is much lower than money that we would have received from FD, RD etc. In fact you can’t even face inflation if you are investing your money in LIC. You overall get 5–6% annually whereas inflation rate ranges near 4–5%, means you will only earn 1–1.5% annually from LIC investment which is totally worthless.Rather for securing your life, pay annually 4k-5k which gives benefit upto 20L-30L but you will not get any amount after completion of policy period(I’m not getting exact word for such policy). Rather you just pay small amount of money annually for securing your life (you will not get any money amount after policy completion) and invest your remaining savings in Mutual funds, bonds, shares, even you may prefer FD,RD or post office.I hope you will get your answer.Thank you.
Where and how do you invest your monthly salary?
Hi All,Awasum answers across from many intellectuals. Thank you for that.My answer’s context is India.Here is my answer and I KIS (keep it simple).Here is some back ground, a married with one 9 year old and staying with my parents. House is paid off and no loans.Age: 36Working Experience- 13 yearsQualification- M.TechI generally do not believe in loans until recent. one of my adviser told me to take home loan and use that money for buying another property as it will give me money at effective rate of 7 % after deducting Tax benefits.I have bought a real estate property again in tier 1 metro city (1.1 Cr.) which is on rent. No loans and fully paid off property.Pointers-I do not buy new phones, all my and wife’s cell phones are used one, I take utmost care while getting a used one, mostly from online portals. I straight away save 30% as I find some phones which are used for just 2- 3 months and available at very cheap rates, I bought a VIVO NEX almost new at 28KWe live frugal, lower middle class life style. Not much fancy and sometime boringMe and wife both believe in simple living and high thinking, we invest in books, holidays, great and quality food and experiencesWe invest in health and things which adds value to life and not lifestyle, we have joined a gym which is nearby but the cheapest in our area. Primary reason is, if the gym is far after a while it will be boring to go everyday. I have never missed 4 days gym in past 5 yearsMy son goes to international board, again nearby my home so no bus expenses, wife goes to drop and pick himSon goes to extra curricular activities everyday- learning chess, guitar, grammars and spoken English etc.No expenses for parents, they take care of them selvesNo liabilities, no loans~70% income goes in savingsPeople say I am miser, I believe them :-)Wife earns 60K a year, she does not invest, she mostly spends in charity, miscellaneous expensesI drive a Honda 2012 model, one of my bike is 12 year old and other one is 1 year oldI use bike going to office, I read some where that “If you are going alone in a car everyday to your workplace, do not consider your self educated”Suggestions are always welcome.Thank you!Edit1: thank you Venkatesh for the suggested edit