@Harleen PPF is a popular long term investment option in India. Since it has a lot of tax benefits, it is the most common investing alternative. May it be salaried individual or business owners, I have seen people putting money in PPF account.
This is indeed a good choice for investing our money and getting fixed safe returns on it. I think the PPF interest rate is 8% p.a. which is good enough.
@balogh03 Yes, the earlier one starts financial planning, the more amount we can accumulate. DIY approach is fine but getting professional help is also a good idea especially if you are a new investor. People are realising the importance of financial planning these days. It's great you consulted a financial expert. How was your experience and what guidance you got? A brief idea, if you can give.
@Tarun So true! As a common man one needs to be cautious and aware of our investments. There are so many investment options these days. ULIP used to be popular many years back. But, now it has lost traction.
People are more inclined towards modern ways of investing like mutual funds. I also agree that ULIP is not the best investment alternative when you have so many better options available.
@jatinderchd This sounds interesting! Really, there are so many ways to know the L&T Mutual fund NAV. I am also thinking to invest in mutual funds. So, gathering all the relevant info here and there. Is NAV or Net asset Value is the current value of a mutual fund unit? Is NAV of mutual fund calculated daily at the end of each market day?
@pranali-yadav said in Child Plans: How to plan for your Child's Education:
Most of the people think insurance as the investment plan. But, it is risk coverage. It will be totally wrong to mix both of them.
Very right! It is better to start investing rather than thinking. Insurance & investment are two different things. Both of these need to be done keeping in mind different objectives.
Planning for your child's education well in advance through proper investment strategy ca really prove helpful. So, we need to work out the best options to get good returns from our investments.
That sounds a wise option. Invest in PPF first and then if you have any surplus you can go for mutual funds and other investment options. At least, you have some money safe in PPF that shall guarantee fixed return.
Getting 15% annual return seems a bit unrealistic that too in a very short period. I think stock market may give that much return but that's very very risky. And, there's no guarantee to earn profits only in stocks unless you are a stock market expert.
"Mutual funds" might be a better way, but that too may not given you the desired return of 15% p.a in a short span of time.
@Tarun Hey, You just summed up my post in few words "Don't put all eggs in one basket" as per a common saying. So, it will definitely turn to be more fruitful if one invests at different places rather than in one type of investment only. The best idea to follow is to invest as per our own:
Financial goals: Short term and long term
Risk tolerance: analyse how much risk taking capacity one has. No risk, low or moderate risk or high risk. You'll get the choice of investments options there itself.
Surplus funds: How much money one is willing to invest?
Period of investment: For how long you wish to invest, very short, moderate or longer time period.
Once we ask ourselves answers to the above 4 important queries, choosing the right investment becomes much easier. Right! Anything you wish to add upon, feel free to do so.
@Punkeirang well said! Deciding our goals is really important. If we have clear objective in front of us we can move ahead to achieve that. I feel we should get rich through our good work.
Adding a side income does help to get rich in terms of money. But, one should grow rich in good deeds.
@Punkeirang I agree to your viewpoint. Fixed deposit is a good option especially for the safe investors. By safe investors, I mean the ones who wish to get a fixed income (not so high, a nominal interest) and no risk of losing the principal amount.
However, short term FDs may not offer high interest. But, if you are ok with a fixed income, then it can be a good fit.
Further, the TDS threshold has been increased on interest income i.e. banks won't deduct TDS on interest of upto Rs.40000 (increased in budget 2019) and Rs.50000 for senior citizens. A good move in favour of FD holders
Only if one is willing to take risk and is ready to bear the results high or low, go and explore different investments like mutual funds and stocks.
@Harleen Nice collection of stock trading apps in India. But, we can't have all of them. It really gets difficult to manage too many apps on our mobile. I would like to go with Moneycontrol app. I have heard a lot about this app and its features.
@Girish Khanna @Punkeirang I think FD is a good option for Senior citizens since they get a good interest rate plus some extra tax saving benefit also. But, for others the interest rate you are saying 7-8% is not the actual rate. This is before tax rate. And, more interest is offered for long term FDs.
Also, the real rate of return is much lesser after taxes. So, you basically get lesser in hand amount.
@Anmol Why are you asking to open 2 demat accounts at first? I mean is there any specific reason to do so. It's possible to manage our investment and trading activity at one place. So, why to get into the hassle of 2 accounts.
@Ishu I think Angel Broking and Kotak score well over others in this full service brokers list. What say? I have an account with Angel Broking. The services are good. But, hearing and reading a lot about discount brokers, I am thinking to switch over to a separate discount broker. Is that a good idea? If yes, what tips you'll like to share. Thanks in advance.
@GURUMOORTHI-G I feel active mode of investing is much better these days. There are so many platforms out there to help. Even the regulators are strict and favour investors. So, I personally like investing directly rather that the ETF or index funds route. What do you think? Am I right to some extent.
@harleen Nice and useful investing tips. What's this power of compounding? Can you give a brief idea about it? I mean, can you explain that in a simple language. I am not good in finance field. So, please clarify a bit.
Hey nice details, very useful tips for beginners.
Personal finance is a subject that is of utmost importance but is not taught in our schools. We need to be more aware of it to be successful financially in our lives.
ETF or Exchange traded funds have evolved as a popular and low-cost way to invest worldwide for investors. Particularly for investors who do not want to track individual stocks but are interested in taking exposure to stock market.
What is an Exchange Traded Fund?
Exchange traded fund is a freely marketable security which tracks a particular index, commodity, bonds or combination of assets. ETFs are traded on the exchange. Hence, their price changes dynamically unlike Mutual funds which have a NAV at the end of the day.
Why Exchange traded funds(ETF) are not popular in India?
Unlike United states and other developed countries, Exchange traded funds haven't really taken off in India.
There are multiple reasons for the same.
Relative Under performance: ETFs have tended to under perform actively managed Mutual funds in India. Which is not the case in markets like US where ETF performance is not very far off from mutual fund performance.
Lack of choices/Diversification: Investors in India do not have too many choices when it comes to investing in ETFs. Currently, there are limited ETFs linked to the index and apart from gold not many commodity ETFs are available in the market. It's like a typical supply-demand problem, not much quality supply and hence not much demand.
Lack of Institutional interest: Few institutions have ETFs on the approved list of investment options. Hence, there are few institutions investing in Exchange traded funds.
Costs are low but not enough: ETFs globally have a low-cost structure while in India the cost is little higher. If you add brokerage costs the costs go up further.
Lack of Awareness: Because of low margins, not enough has been done to make ETFs popular amongst investors in India. With distributors not getting any margins, they are not promoting them much.
No additional tax incentives: In US ETFs are more tax efficient than mutual funds. This is not as such in India.This is primarily because mutual funds and ETFs are treated similarly as far as tax incentives are concerned in India.
Not enough liquidity: Lack of popularity of ETFs amongst investors results in reduced liquidity as they are traded in the market. This results in less efficient price discovery and higher spreads for investors. This is not the ideal thing to have in a traded asset class.
What do you think about ETFs in India? Will they gain more popularity? Feel free to share your viewpoint on the same.
You must have heard about Public Provident Fund having 15 years of maturity. But, you probably have no idea about its withdrawal rules and policies. That's why you have landed here!
Hoping you already know about PPF scheme, we are moving directly to the main crux.
Closure Of PPF Account:
The maturity tenure for PPF account is 15 financial years. It means, if you have opened the account in August 2015, you can close it on 31st March 2031. Once maturity period is completed, you can withdraw entire amount compounded in the account over 15 years.
PPF authorities have strict restrictions regarding withdrawal. You are not allowed to make a premature withdrawal unless money is needed for medical urgency or higher education. In such cases, the government has provided the relaxation. But still, your account has to be 5 years older for premature withdrawal.
Coming to the main point, you have three closure options once maturity period is finished.
How to close PPF account? Options available
At maturity, you have the following three choices:
Withdraw total PPF balance
Extension of PPF accounts without any further contribution
Extension of PPF accounts with further contribution
Let's discuss this one by one:
1. Withdraw Total PPF Balance:
After the completion of 15 years maturity, you have freedom to make the withdrawal. You can get entire PF balance along with the compounded interest. You won't face any problem for this step. Just take your passbook to the respective bank or post office and request for withdrawal. You need to submit a Form C with essential details and documents for withdrawal.
2. Extension Of PPF Account Without Any Further Contribution:
Sometimes, people don't need to withdraw PPF balance. The reason can be anything. In this situation, you can extend the PPF account that does not require any further contribution. For this option, you don't need to fill any form. Just sit there when maturity period is finished.
If you don't make a move to withdrawal, your account will go in this mode by default. By mode, I meant PPF account will act as the savings account. You can withdraw money when needed.
An extended PPF account will have following characteristics:
You can make the withdrawal anytime you want.
The withdrawal is allowed only for once in a year.
The amount left in the account will earn the interest.
To close the account, you need to make a complete withdrawal.
You cannot make any further deposits.
The account will have no privileges under section 80C.
3. Extension Of PPF Account With Further Contribution:
This is the most outstanding feature of PPF account. If you can maintain good cash flow movement, you should extend the PPF account with further deposits. For this, you have to make intimation within one year of maturity. Otherwise, you cannot avail this opportunity.
After maturity, you can extend the PPF account for further 5 years. The Form H is mandatory for the extension request. Once 5 years are done, you may make another extension request again with the Form H!
Talking about features, it pretty much acts like normal PPF account:
A minimum deposit of Rs. 500 per year is compulsory.
The account still claims the tax deduction.
Before 5 years, you cannot ask for closure.
For once in a year, you can make withdrawal as per need.
You cannot make withdrawal more than 60% of total PPF balance.
All three withdrawal options can prove beneficial as per your requirements.
For instance, you may use the first option if you need money right after the retirement.
The second option is great if you are financially strong and don't want entire PPF balance. In this way, you can earn interest and make a withdrawal when you need it.
The third option is an ideal situation for people with financial stability. As, this option comes with interest, tax benefits, and withdrawal relaxation.
Hopefully, you get the answer you were looking for! In case you have something valuable to share, please pen down your valuable thoughts.
@ishu Yes, financial planning is really crucial. The cost of living is so high these days. I wonder how the prices of products and services will sky-rocket in the coming years. So, it's better we plan well for our retirement. There are too many financial advisors, I really get confused which one to choose. Is it worth consulting a financial planner? What if, I want to manage my investments myself, is it possible? or Should I consult for better investment options?
"Blockchain" the underlying technology for cryptocurrency has been the talk of the town recently. Remember the 2017 huge crypto wave i.e. Bitcoin craze that took the financial markets by surprise. Bitcoin is just one use case of this blockchain technology. There are a number of use cases of this globally distributed ledger.
Hence, there's a lot to know about this fast emerging technology.
Here, you shall know about one use case i.e. blockchain and finance. How blockchain is changing the financial industry or is ready for it?
1. Cryptocurrency: This has surely disrupted the financial markets. The use and acceptability of altcoins in some countries has made it even more popular. It is entering the payment system at a much faster pace than it was thought to be. While some other countries have plans to regulate it.
2. Banking system: The global banking system is another area which is significantly getting affected by blockchain. A good example is popular cryptocurrency called "Ripple" that easily connects payments across different networks.
3. Insurance sector & Other Financial institutions: Blockchain technology, a digital revolution that is changing the world and its impact on the financial industry is already seen. A number of global financial companies are actively testing to harness the maximum benefits of this robust blockchain technology.
There are bright chances of spreading the use of blockchain to some mainstream financial utilities.
What is your opinion on blockchain? Do you feel it as the next big thing in the financial industry around you? or Is it still in the nascent stage still to add much more to its features.
Anyways, we can't deny the fact, that this digital transformation is all set to connect users across the globe.
Let's see how fast and how far this can lead to in the coming days.
Financial planning is a complex process which requires you to review your current fiances, cash flows, estimate future cash flows as well as financial obligations,create goals and map money that you will require to achieve the goal, understand amount of insurance you would need now and in future, look at your tax outgo and do tax planning, there are lot of tools for financial planning which can come handy for all these activities, this post summarizes some of these tools that can come handy as you try to create a good financial plan
This is a simple calculator which helps you calculate what kind of funds you will require to have a comfortable retirement. It calculates your retirement corpus as well as how much you should save now to achieve that corpus. This Retirement calculator uses your current expenses as a base and projects your future expenses based on inflation assumptions in future to arrive at your corpus.
Health Insurance Calculator
Health insurance calculator helps you to calculate the right insurance cover for you , in general health insurance should provide the right cover for you and your family, health insurance cover varies with your city , age and family status. Also premium changes with your current health condition etc.
SIP planner/calculator helps you create a financial goal and tells you how much investment you require every month to reach the goal, the goal can be your child's education and you might require certain money to take care of that, this tool can help you plan for that, this can also be an indication to
Budget planner is a handy tool to help you track your income and expenses, this helps you be tidy with your finances and understand how your money is moving
Fixed Deposit calculator:
Fixed deposit calculator helps you calculate the periodic interest on your fixed deposits, it also helps you to calculated amount at the end of the term of your fixed deposit, this calculator can be used not just for fixed deposits, but post office deposits etc. You can use following calculators to calculate amount on your fixed deposits
Income tax calculator:
Income tax calculators help you to calculate your tax obligations for the year, you need to select the right assessment year for the same, you can go to income tax department site and calculate your tax, you can go here
Disclaimer: Any views/recommendations expressed in the forum, of the individuals are their own only. Fintrakk doesn't endorse or recommend any financial product or views by the users of the forum. The information/comments on the forum should not be considered as a financial advise. Please do your own due diligence before investing. Fintrakk is not responsible for any financial loss to any of its visitor/user.