ARE YOU SELECTING RIGHT.?

In this article features different investment products have been elaborated along with the comparison of returns according to the investment tenure. This will help the investor to decide for himself to choose the correct product comparing Time, Returns & Taxability each of them.

Investment Choice

INVESTMENT FOR A LONGER TENURE

PPF NPS
* PPF having tenure of 15 years plus extensions 5 year in  each  block NPS continues until the subscriber reaches the age of 60 years.
* Return is earned in form of interest i.e. 7.10% The returns are market linked & investor can make choice accordingly
* There is no tax on earning at any stage of investment Tax is applicable at time of withdrawal
20% taxable
40% is tax free,
Annuity of 40% is to be purchased
RETURNS
> Initial Investment – Rs 100,000 Initial investment – Rs 100,000
> ROI ( present ) – 7.10% ROI ( Assumed) – 8.15%
> Time – 15 years Time – 15 years –
> Return after 15 years –Rs 2,89,175 Return after 15 years –Rs 3,38,166
> Fully tax-free income. Taxable – 20% amount , Tax free – 20%,    Annuity – 40%

INVESTMENT FOR 5 YEAR TENURE

BANK FIXED DEPOSIT BALANCED FUND
* F.D is the safe investments as interest offered by banks Investment varies across asset class from low to medium risk.
* The interest earned on F.D. varies from 5-6%, Exemption on *  Tax saver F.D up to 1.5 lakh is available.  It gives safe but low returns , average returns in tenure of 5 years is between 8-9%
* TDS is deducted @ 10% if the interest earned above 10,000 Taxation is according to scheme orientation  (equity / debt)

RETURNS

> Initial Investment – Rs 100,000.  Initial Investment –Rs 100,000.
> ROI (Assumed) – 6%. ROI ( Assumed ) – 7%.
> Time – 5 years. Time – 5 years.
> Return after 5 years –Rs 1,34,885.  Return after 5 years –Rs 1,41,762.


5 Year Investment

SCSS DEBT MUTUAL FUND
* Scheme introduced for citizens above 60 years of age. Funds are invested in fixed income securities – bonds & treasury bills, preferred by investor who are not willing to invest in equity market.
* Account tenure is of 5 years extension allowed for  3 years, maximum 15 lakh may be deposited which earns the interest @7.4%. Return in 5 years tenure ranges from 7 – 8%.
* Deposit is eligible for 80 C deduction & interest earned can be claimed under 80TTA. Short term gain taxed as per slab rate & long term gain taxed @ 20% with indexation.

RETURNS

> Initial Investment –Rs 100,000. Initial Investment – Rs 100,000.
> ROI ( present ) – 7.4 % ROI ( present ) – 7.4 %
> Time – 5 years. Time – 5 years.
> Return after 5 years –Rs 1,44,610 Return after 5 years – Rs 1,34,885. 

INVESTMENT FOR EMERGENCY

SAVING BANK ACCOUNT LIQUID FUND
* Bank account allow to deposit/ withdraw money while keeping it safe. These funds provide high degree of liquidity & safety to capital, considered where horizon is of short term.
* The interest earned on saving account is about 3-4% which is very low Liquid funds are best option to park the Idle funds.
* These funds gives return from about 7-9%, better than saving bank A/c.

RETURNS

> Initial Investment – Rs 100,000. Initial Investment – Rs 100,000.
> ROI ( present ) – 3% ROI ( Assumed ) –  6%
> Time – 5 years. Time –5 years.
> Return after 5 years – Rs 1,16,162 Return after 5 years –  Rs 1,34,885

INVESTMENT IN PHYSICAL FORM

REAL ESTATE GOLD
* Real estate are tangible assets including land & building. Gold investment provide sense of safety & returns are in-line with inflation.
* Returns from real estate are earn income in form of rentals or capital appreciation. Gold provides liquidity i.e. can be traded at prevailing price.
* Investment is illiquid , require heavy cash outlay with steady growth. Gold can be purchased in physical form, through ETF or gold funds.

INVESTMENT FOR 10-15 YEAR TENURE

EQUITY  LARGE CAP FUNDS  
* This is direct investment in the equity stock market having higher risk. This is indirect investment in Equity through mutual funds lowering the risk
* People with proper knowledge & analysis should invest in    shares keeping risk factor accordingly. Due to diversification among different companies large cap funds are considered.
* Avg Return in large cap funds are measured about 10 -11%

Return Comparision

We have not compared the returns of the above four investment avenues which are Real estate, gold, Large cap equity funds & stocks(shares) as these products are fully market driven & there value depends on the market forces prevailing at particular point of time & so to forecast their value is quite not possible.

Author Bio

Qualification: Graduate
Company: N/A
Location: AGRA, Uttar Pradesh, IN
Member Since: 24 Jul 2020 | Total Posts: 15
I have Cleared CA (intermediate) also cleared various series conducted by N.I.S.M (National Institute of Securities Market), Investment Advisory, Research Analyst, Merchant Banking & Retirement planning. Recently cleared exam of Independent Director conducted by IICA ( Indian Institute Of Corporate View Full Profile

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