When do you need the money?
In the midst of this climate of helpless loan costs on fixed deposits and muffled gets back from other obligation choices, along with the new tax assessment rules, financial investors in the decent pay space should know their utility and objectives well.
Specialists say that it is the time skyline that eventually figures out which fixed pay choice suits you. Here are reasonable instruments based on four general classifications of monetary objectives, in light of particular venture skylines and personal duty treatment of each.
If you need to park a large sum for 3-6 months
At the point when the speculation skyline is so short, the attention ought to be on capital security and liquidity and not on returns. In the event that you hold a lot of money and need to redeploy it in 3-6 months, park it in a proper store or fluid asset. Regardless of whether the return is possibly higher, it won’t have a major effect in 3-6 months.
Truth be told, a few banks are presenting to 6-6.5% premium on the investment funds financial balance on the off chance that the sum surpasses a specific limit.
Assuming your bank is among these, then, at that point, you can consider keeping the cash in your financial balance. Under Sec 80TTA, up to Rs 10,000 premium on the investment funds bank balance is tax exempt which will cut down the general expense on your premium procured.
Alternatively, you can go for..
Liquid funds and ultra brief span obligation reserves. Government security yields have ascended lately and the pattern might proceed assuming expansion rises. Be that as it may, these assets will stay unaffected in light of the fact that they hold extremely momentary instruments.
For those zeroed in a lot on decreasing duty outgo, exchange assets can be a decent choice. The class has given 4.18% returns in the beyond one year, which is practically identical with the profits created by obligation store classifications. Yet, these exchange reserves seek a similar assessment treatment as value common subsidizes which implies that transient additions will be charged at 15%.
If you will need the money after 1-2 years
The investment options are pretty similar in this case. You can also consider corporate fixed deposits, where interest rates are slightly higher than what banks offer. Note, however, that corporate deposits are not as safe as bank deposits. You need to exercise caution when investing in either.
Short-term debt funds are also a good idea. The benchmark 10-year government bond yield, which hovered around 6% for most of this year, has already moved up to 6.34% and is expected to rise further.
However, funds holding short-term bonds will not be impacted. Arbitrage funds can prove very useful if the holding period is a year or more. Since these schemes are treated as equity funds by the taxman, gains of up to Rs 1 lakh will be tax-exempt.
If you want to invest for 3-5 years
Your have a wider array of options if you want to invest for three years or more. In this case, gains from debt funds are treated as long-term capital gains, meaning at 20% after indexation.
For five years, you can also consider Post Office schemes such as National Savings Certificates, Kisan Vikas Patras and the Monthly Income Scheme. These small savings schemes offer higher interest than bank deposits while the sovereign guarantee makes them completely safe. The problem is they are not very flexible.
NSCs cannot be foreclosed, though Kisan Vikas Patras can be sold after 30 months. Senior citizens (above 60 years) can consider the Senior Citizens’ Saving Scheme, which offers 7.4% returns and pays interest quarterly.
If you remain invested for over 6-7 years
Till last year, the Employees’ Provident Fund (EPF) was the best long haul interest in the red. Workers covered by the plan could take care of a major lump of their compensation to procure 8.5% tax exempt returns. However, presently, the premium acquired on a worker’s commitment above Rs 2.5 lakh has become available. All things being equal, specialists say that the PF stays the best long haul choice and one should debilitate the Rs 2.5 lakh limit for tax-exempt commitments.
More long-term options
The Public Provident Fund (PPF) is another tax-exempt choice worth considering. At 7.1%, it is far superior than other little investment funds plans and bank stores. However, it has a yearly speculation breaking point of Rs 1.5 lakh.
Assuming you have as of now depleted this breaking point, you can consider the RBI Floating Rate Savings Bonds which are offering 7.15% at the present time. These securities have a development of seven years and the financing cost is 35 premise focuses over the rate presented on the National Savings Certificates. To put something aside for your girl, go for the Sukanya plot which offers 7.6% tax exempt interest. Yet, it is open just to young ladies under 10.
