Tuesday, 7 June 2011

Investment plan for lazy investors and those who have not time to invest

Human beings are social beings and we can see different type of people in the society. Somebody is active for all work and somebody is not that much active. Some of them are active only for some particular works and for other activities they may not show activeness. In case of investment also you can see variety of investors. Some people are very much alert about their investments and they analyze and plan their investments in proper methods and somebody shows carelessness in investments. This does not mean that the careful people earn more than other. It is good that you have an active planning and care about your investments.

Here we are explaining some investment plan for lazy investors or investors those who have not enough time to take care their investments. This strategy can follow for all those who have no time to look after their investments properly. Non risky investments are good for such people. Risky investments should have much care than non risky investments. The following investments are suitable for such people who do not have much time to take care of their money.

Provident Fund Investment

If you are an employee, Provident fund investment is the best investment for you. Once you inform your employer that the amount of money or the percentage of your salary to be deducted to Provident Fund and the rest will be taken care of the employer. Everything will be automated for you. The employer will deduct the money and deposit to the Employees Provident Fund Organization (EPFO) or other trusts till your retirement and at the time of retirement you can collect the whole money with accumulated interest. Provident fund investment is the best safe investment method which gives you 9.5% tax free interest (at present) and the government is planning to increase the rate of interest. In case of private employment the employer also invest same amount (up to a certain percentage of basic) to the employee’s provident fund and the benefit will be doubled.

If you allow your employer to deduct Rs. 5000 as PF every month, your investment will be grown up to Rs. 36,00,000 after 20 years while you invest only the total amount of Rs. 12,00,000 (Rs. 5000 x 240). The power of accumulated interest will increase your investment in a lazy way. You should not do anything for the same. Just allow the employer to deduct the money from your salary. And the amount you invested will be exempted from income tax every year and you can save Rs. 6000 as tax every year is amounted to Rs. 120000 in 20 years. And this Rs. 24,00,000 (the gain you get as interest) is completely tax free and you save Rs. 2,40,000 as tax in 10% tax bracket). Then your total gain will be Rs. 2760000 (Rs. 2400000 interest + Rs. 240000 tax on interest + 120000 tax exempted for 20 years) with an investment of Rs 12,00,000 and the Total accumulated amount plus tax benefit will be Rs. 39,60,000. An average gross gain is 11.5% per year. No doubt this is a good investment plan for lazy investors. But this is the better safe investment plan for all investors.

Public Provident Fund Investment

Public Provident Fund also a safe investment method for investors those who have no time to look after their investment. This is also same a provident fund, but the difference is that the provident fund is only for employees. The PPF is for all resident Indian Citizen. An investor can invest a maximum of Rs. 70000 in a year and a minimum of Rs. 500. The present interest rate is 8% and the interest is tax free. The amount you deposit in PPF is also exempted from tax every year under section 80C of income tax act. The holding period of PPF is 15 years and can be increased to multiples of 5 years. One can withdraw money from PPF after 6 years of starting PPF as per certain conditions. You can invest in 12 or less number of installments or in a lump sum amount. If you have a net banking account and your PPF account is in any bank you can make online bank transfer to your PPF account. You should not spend time for going to a particular bank branch for depositing in PPF account.

If you invest Rs. 5000 monthly in PPF account, your investment will be grown up to Rs. 30,00,000 after 20 years while you invest only the total amount of Rs. 12,00,000 (Rs. 5000 x 240). Here also the power of accumulated interest helps you to grow your investment. Just transfer Rs. 5000 every month to your PPF account. The investment in PPF also exempted from income tax every year and you can save Rs. 6000 as tax every year is amounted to Rs. 120000 in 20 years. And this Rs. 18,00,000 (the gain you got as interest is completely tax free and you save Rs. 1,80,000 as tax in 10% tax bracket). Then your total gain will be Rs. 2100000 =( Rs. 1800000 interest + Rs. 180000 tax on interest + 120000 tax exempted for 20 years) with an investment of Rs 12,00,000 and the Total accumulated amount plus tax benefit will be Rs. 33,00,000. An average gross gain is 8.75% per year. No doubt this is also a good and safe investment plan for lazy investors and other investors. (All about PPF)

Other Investment Plans

Bank fixed deposits, Recurring deposits, Post office deposit schemes such as NSC, Post office Monthly Income Scheme, Post office time deposits, Post office recurring deposits etc. are also good and safe investment options and the investor should not take much care about their investments. Income from all these investments is taxable. Some of the above mentioned investments are tax exempted while making investments. If you do not have time, just start a net banking account and do all possible transactions through net banking to save your time. (Keep all security measures of the net banking account strictly)

Purchase of real estate and house property, buying the Initial public offerings (fresh issue of shares) of strong companies and keep it for a long time is also a good investment option in equity and should not spent much time for it. Income from long term equity investment (selling after one year) is exempted from tax as per the current tax rules.

So if you do not have enough time to take care of your investments, you can also be a good investor with your hard earned money with the plans we describe in this post.  We wish you to become a good investor.

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