Sunday, 8 May 2011

Low risk steady income investment plans

When you look around, you can see so many investment plans with attractive offers and invitations. It is very difficult to a common man to find which investment plan is suitable for him. He will be miserable with colourful offers and may be try one or more investment plans which may not be suitable for his financial goals. Whenever an investor tries to invest he has to do some home work and should plan his future goals and the time span to achieve each financial goal. He has to consider his age, profession and the amount of regular income he could earn etc.

When he plans his investment he has to consider the benefit of his investment plans whether it is given out interest, dividend or profit. The risk factor also should be considered. I f he need money in near future he should not go for stocks or mutual funds, because these two financial products could not earn a good income with a short time period and an inexperienced person could not go for a  stock market, which may lead him to a heavy loss. Unless most of the investors in stock market must become multi millionaires.

Let us discuss a few safe low risk investment plans which may give you steady income or growth and short period of time.

Bank fixed deposits

This is a suitable investment option for all investors for any time period. For short term period the fixed deposits are good and handy. You can opt from 3months to 5 or ten years or more and can invest Rs. Ten thousand or any amount more than ten Rs. 10000. Some banks allow you to deposit less than Rs. 10000 also in fixed deposits. The main advantage of fixed deposit is that you can turn the fixed deposit to liquid money any time when you need money with a small penal interest, if you withdraw before the maturity period. The risk rate is very low for fixed deposits, only if the Bank become insolvent and liquidated which may never happened, if you deposit in nationalized banks or banks with high profile. But there are certain disadvantages also for this investment option. The main disadvantage is that the low interest rate and interest rate is varying according to the amount and time period of investment. But once fixed the interest will not be low or high for the particular investment till maturity or renewal, except premature withdrawal or premature renewal. The interest on fixed deposit is taxable and if the amount of interest in a financial year is Rs. 10000 or more for a depositor the Tax will be deducted at Source. Special Fixed deposits for 5 years can be opted as tax saving investment under section 80C of income tax rule.

Recurring Deposits

Recurring Deposit is a regular and continuous deposit in installments of certain amount of money for a certain period of time. You can start with a very low amount of Rs. 100 or more monthly installments for any time period starting from 6 months to 5 years or more. You will get interest and you can accumulate money in easy installments for your financial goals. You can break the recurring deposit at any time when you require the money with penal interest or can withdraw the money at maturity. If you wisely combine the RD (Recurring Deposit) and FD (Fixed Deposit) you can make a good amount of money for satisfying your financial goals. Likewise Fixed Deposits the Recurring Deposits also has a low risk profile.

Post office saving schemes

Post offices savings schemes are also safe deposits and most of these deposits have a certain time period. National Saving Schemes (NSC), Indira Vikas Patras (IVP), Kissan Vikas Patra (KVP), Post Office Monthly Income Scheme (MIS), Post office recurring deposits, Public Provident Fund (PPF), Senior Citizens’ Saving Scheme (SCSS) are main post office deposits schemes. In all these schemes except Public Provident Fund the interest is taxable, but no Tax (TDS) is deducted at source. (You can read more about these schemes by clicking the concerned links). NSC and PPF are considered as Tax saving schemes under section 80C of the present income tax rules.

Infrastructure bonds

Infrastructure bonds are issued by certain companies and the time period 5 to 10 years) and interest rates (8% to 9%) are varying from schemes to schemes. Infrastructure bonds of certain companies are considered as tax saving investments under section 80 CCF of income tax rules. Read more about Infrastructure bonds.

Company Fixed Deposits

Some approved companies accept fixed deposit from General Public and these investments and comparatively low risk and steady income schemes. But when you choose the company, go for some good companies. Read more about company fixed deposits.

All the above-mentioned investment plans are low risk and steady income or Growth plans and one can invest in these schemes with high confidence and trust.

1 comment :

  1. Thanks for sharing this useful post. It is very important to understand income tax saving criteria and tips to save lot. This blog post is very important for all who want more income tax return.