— You can wave your phone to make payments through your IDFC First debit card Wave phone
–SafePay will make retail store or PoS payments contactless experience
IDFC FIRST Bank is set to launch SafePay, a digital facility that allows contactless debit card payments by simply waving one’s smartphone against a Near Field Communication (NFC)-enabled POS terminal.
SafePay will help Debit card users to maintain social distance while making purchases at retail stores and malls. There is no need to hand over the card to a merchant or even carry it in the wallet or purse.
Users can simply wave, pay and go, making the payment process not only touch-free, but also faster, simpler and safer.
Contactless payment
The first such facility to be made available in an integrated mobile banking app, the SafePay feature has been tested successfully and certified by Visa. It will be available to users on the Bank’s mobile app in the next one week.
SafePay enables contactless payments of up to Rs. 2,000 per transaction and up to a limit of Rs. 20,000 per day, making everyday purchases easy.
To enable SafePay, consumers need to do a one-time activation by linking their IDFC FIRST Bank debit card to the mobile banking app. Once activated, users can then make payments at merchant locations by just unlocking the mobile phone and waving it against a NFC-enabled POS terminal, through which encrypted card information is transmitted wirelessly to the terminal. Users do not need to log into the Bank’s mobile app for every transaction. The debit card can be added to the mobile app and deleted if required. To enable a payment, the NFC-enabled smartphone needs to be waved at the terminal within 30 seconds of unlocking it.
SafePay is part of the Bank’s efforts to deliver a high quality digital experience to customers across its range of products and services. In the payments space, the Bank’s emphasis is to make transacting simple, seamless and safe.
The facility is set to be available for resident Savings Account holders having VISA cards and IDFC FIRST Mobile App on NFC-enabled Android device with OS 5 & above.
To activate SafePay:
Link the debit card to IDFC FIRST Bank Mobile App
To pay, unlock the NFC-enabled smartphone
Wave it against a NFC-enabled POS terminal; encrypted card information is transmitted wirelessly to the terminal
I write on investment, insurance, Mutual Funds, Credit Cards, everything personal Finance and Financial Education. You can follow me on twitter and Facebook too. Look forward to see you soon. Do share your queries and suggestion in the comment box. #MyMoneyStreets
Why to buy Life Insurance? Life insurance is the best way to protect your family financially. In plain language, it protect the family members financially incase of death of the polcy holder. There are other benefits available apart from death benefit. I have come across calls from many insurance agents who try to sell other life insurance products like endowment plans and ULIPs trying to push as term plan. In this post, we will talk about why term plan/ protection plan/ peru life insurance makes sense for a bread winner.
Term Insurance product has caught fancy of savvy Investors only recently , little more than a decade and constantly gaining popularity in Urban India especially. Let us look at what is a pure term insurance and how it works in our scheme of financial planning.
Read – How life insurance claims gets rejected? What to do if claim is rejection is wrong?
“Insurance” is a contract to protect against risk. Investment components are added to the product to make it more attractive. I must add, that a chunk of lump-sum money payout together at a deferred term incase of ULIP and Endowment insurance plans makes the products (savings/Investment + Insurance) a very attractive offer. But this one is unable to over any family adequately.
For all Life Insurance insurance plans, IRDAI (Insurance regulator and Development Authority of India) has mandated a maximum premium to be capped at 10% of the sum assured (or Sum Assured to be 10 times) to be annual policy premium to become eligible for tax deduction benefit under income tax section 80C for and total maximum investments capped at Rs. 1,50,000 as on FY 2020-2021 .
Let us consider we have 3 insurance policy options – a) Option offering 10 times Sum Assured and Option B) 20 Times of Sum Assured and a 3) A Term policy. For illustration we are chosing a 30 year old male non-smoking with 1 crore sum assured for 3 years. I will not mention any insurance company here, as I am doing this illustration for education purpose and understanding only. I am also not including the saving or investing benefits offered by option A and Option B (Cause they do have assurance of retun on maturity, Option C is only death benefit, No Maturity value).
I am taking HDFC Life insurance Term insurance premium for illustration purpose.
Life Insurance coverage
10 times of yearly premiumPlan A
20 times of yearly premiumPlan B
Term Insurance (Pure protection plan) [HDFC Life]Plan C [approx]
25 Lakh
2.5 lakh
1.25 lakh
Rs. 3,600/- (approximate)
50 Lakhs
5 lakh
2.5 lakh
Rs. 6,000/- (approximate)
75 Lakhs
7.5 lakh
3.75 lakhs
Rs. 8,000/-(approximate)
1 Crore
10 lakhs
5 lakhs
Rs. 10,000/*- (approximate)
So we can see, the premium for adequate life coverage can be bought at a very affordable rate in Term insurance plan, while the other plans offer same insurance cover at 40 to 80 times of the term plan.
However, Plan A and Plan B has additional investment component – Noteworthy, your investment cannot be partially withdrawn, making it an illiquid investment option through out the policy term. If you have job change, take sabbatical or some minor setback, Plan A and Plan B will become a burden and on non-payment Insurance benefit will be compromised.
What we can Expect from a pure-term Insurance plan? It is a low cost high coverage insurance plan. It is designed for financially protect the family of the policy holder in-case of untimely death. This insurance is only for the bread-winner of the family whoseuntimely demise can shake the financial foundation of the loved ones. , it should be taken by anyone who has responsibilities like elderly dependant parents, dependant wife and children, home loan, car loan etc. One should consider higher insurance cover incase of medical conditions of self or family members, impending college education cost for children or absence of retirement kitty.
Term insurance benefits
As Life insurance acts as protection against untimely death, it is said that one should take atleast 10 times of one’s annual salary, to adequately protect the loved ones to protect against inflation, child education, non-earning spouse, dependent elderly etc.
Term plan doesn’t guarantee a return on your premium. There is no financial product which is risk free. But I have learnt with experience, that biggest ‘risk’ in finanacial product is not knowing the product and category well. So check the exclusions each insurance company has mentioned in their websites and learn and choose the insurer after reading and taking proper feedbacks.
Important factors to choose term insurance policy –
How many dependents you have – If you have elderly parents dependent on your income or you are married and your spouse is a home maker (and) or school going Children
Family financial Goals – If you have not yet saved enough for adequate critical milestones like children higher education, have outstanding big loans (home loan/ vehicle loan)
What is the adequate life cover you need– Do some calculation on this. Apart from 10 times of yearly salary rule, do you have any high liability like children high education/ outstanding Home loan etc
Compare a few options based on coverage amount, claim-ratio, policy exclusions and rejection ratio
Term plan is not a substitute for investment. It offers a support system. In ideal situation, term-insurance premium we should consider as a yearly premium to Insurance company for protecting future of your loved ones in your absense, while buying this insurance, we really hope and pray that we should never require to file this claim settlement form ever. As this insurance cover offers a lumpum benefit to the immediate family members in case of death, this works like a parachute or a cushion from a hard-landing.
Investment and Insurance are both essential and important part of our financial plan. But, both has different purpose in the plan. Even if you choose to buy ULIP or Endowment, you should do some research and learn about all the insurance option before opting for an insurance plan
Old age deserves some peace of mind and happiness. But millions of people under poverty line, that is still distant dream in India. To fight the perils of poverty and old age, PM Narendra Modi introduced multiple social security scheme in year 2015. And Atal Pension Yojana is one of them.
What is Atal Pension Yojana? This is a pension yojana now you can suggest your maid, cook, Kirana wala, Plumber and contract labours and everyone who doesnt have one and doesn’t pay income tax yet..
In 2015, Indian Government introduced important financial inclusion and social security programs for the financially non-protected citizens especially. To enseure financial security to especially for those working in informal sector or self-employed Indian citizens, The Government launched Life Insurance, Personal Accident Insurance and Pension Scheme – a simple savings scheme.
Atal Pension Yojana is a scheme aimed at protecting the financial future of the low-income self employed people and people with unorganized sectors, like shop-keepers, contract labours etc.
This scheme is open to citizens of India who doesn’t pay income tax yet and not empanelled under EPF and other schemes (chart mentioned below), one can subscribe to it between 18-40 years, the contribution can be made till 60 years of age. Under this scheme, a subscriber will receive a minimum guaranteed pension of Rs 1,000 to Rs 5,000 per month after attaining the age of 60 years, depending upon his contributions. According to a recent announcement in July 2020, Finance Ministry is considering a proposal to relaxing the maximum monthly pension to Rs 10,000 from Rs. 5000 currently and raise the maximum age limit for entry age in the Atal Pension Yojana scheme to 50 years.
Finance ministry is also considering the proposal to enable the Atal Pension Yojana (APY) subscribers to increase/decrease their pension plans as per their changed income levels and capacity to pay APY contributions, which will be very uselful foo continue the subscriber contributions in the scheme till 60 years.”
How can One apply for Atal Pension Yojana (Online too)?
This scheme is currently being distributed through 258 active APY Service Providers consisting of Banks and post-offices as this scheme is only available to those who have a Savings Bank account. Having a Aadhaar card will be very useful in this.
Who can Apply?
Any Indian Citizen Between Age 18 – 40 can enter the scheme and continue the contribution till 60 years. Who is not empanelled with any other government pension / EPF scheme.
What is the minimum contribution requirement for APY? And how frequently one has to pay?
The contribution will depend on the entry age and target pension, . One can choose monthly, quarterly or half-yearly payment. The contribution can be made by auto-debit facility.
Atal Pension Yojana Chart
You can change the deposit amount during the course of accumulation phase, once a year. One can get physical transaction receipt every year.
There is a small-payment on non-payment on non-contribution. Banks are required to collect Rs. 1 per month for contribution of every Rs. 100, or part thereof, for each delayed monthly contributions. On non-payment, one has to make the contribution next month.
It is mandatory to provide nominee details in APY account. If the subscriber is married, the spouse will be the default nominee. Unmarried subscribers can nominate any other person as nominee & they have to provide spouse details after marriage.
How to Check the Status of your contribution in Atal Pension Yojana? Find Atal pension yojana statement here – Keep Your PRAN No. handy. https://www.npscra.nsdl.co.in/scheme-details.php Then click on APY e-PRAN/Transaction Statement View You will be directed to your contribution page.
How does Pension distribution happen? Subscribers would receive the guaranteed minimum monthly pension of Rs. 1000 or Rs. 2000 or Rs. 3000 or Rs. 4000 or Rs. 5000 at the age of 60 years. The monthly pension would be transferred to the subscriber’s account, and after him to his spouse and after their death, the pension corpus, as accumulated at age 60 of the subscriber, would be returned to the nominee of the subscriber.
In case of premature death of subscriber (death before 60 years of age), spouse of the subscriber can continue contribution to APY account of the subscriber, for the remaining vesting period, till the original subscriber would have attained the age of 60 years.
Other pension plans are there like NPS, lic pension plan, Annuity plan etc you can check online for them.
Who cannot apply for Atal Pension Yojana? Indian Citizens who are already part of a social security system such as mentioned below cannot apply for it.
Employees’ Provident Fund and Miscellaneous Provision Act, 1952 The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948 Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955 Seamens’ Provident Fund Act, 1966 Jammu Kashmir Employees’ Provident Fund and Miscellaneous Provision Act, 1961. Or any other statutory social security scheme
Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana aims to cover the lower section of our society, let us spread the word about the benefits to the people who may need it.
Banks – State Bank of India, Canara Bank, Punjab National Bank, Federal Bank, UCO Bank and many more You can open Atal Pension Yojana account at India Post office branches too. The forms are available in Hindi, Bangla, Gujarati, Marathi, Tamil,Telegu, Oriya etc.
Many a times lack of awareness is what makes us feel helpless. During this lock-down phase, I have spoken to many women who work as house-helps, other jobs earning small sum, many of them didnot have Jan-dhan account, the ladies who had Jan-dhan account, most of them, depending on the eligibility, got the money deposited in their account as promised by government. We may not have ultra-social security facilities, but we do have many benefits which a lot of people are not aware of. Let us take the responsibility and share the information on Jan Dhan account, Life Insurance – Pradhan Mantri Jeevan Jyoti Bima Yojana, Personal accident insurance (Pradhan Mantri Suraksha Bima Yojana) and Atal Pension Yojana.https://www.youtube.com/embed/XE2iFvR5rQc?start=43&feature=oembed
Pradhan Mantri Suraksha Bima Yojana
Pradhan Mantri Suraksha Bima Yojana offers Accident cover for only Rs. 12 per year. Let us look at Eligibility, Cover and benefits. It is a government-backed accident insurance scheme.
It is an personal accident insurance, introduced by PM Narendra Modi in the year 2015, to include all Indian Citizen under this social security cover. This is helpful for people especially who don’t have life insurance or health insurance cover to financially protect the policy holder incase of permanent partial or total disability incase of an accident.
Pradhan Mantri Suraksha Bima Yojana
Tip – To keep your PMSBY and PMJJBY insurance working, ensure to keep Rs. 340 in your Bank Account in Month of May, so that there is no default, otherwise insurance will expire and you will happy to apply fresh.
What are the features of PMSBY?
PMSBY gives the policy holder to insure oneself against unfortunate events that can lead to death or disability.
The premium payment process relies on the auto-debit facility. The policyholder must approve of this while enrolling for the scheme.
When will the policy be terminated?
The policy will be terminated in the cases if the registered bank account is closed, the account balance is insufficient in the time of the yearly premium payment or the policyholder reaches the age of 70.
Eligibility Criteria for Pradhan Mantri Suraksha Bima Yojana
The minimum entry age for this scheme is 18 years
Age limit for availing this insurance benefit is 70 years
Applicant’s saving bank account should be integrated with the person’s Aadhaar card
PMSBY application form is available in several regional languages apart from English and Hindi. For example, the form is available in Hindi, Gujarati, Marathi, Tamil, Telegu, Oriya
You read the headline right, no catch there at all. I have seen this fund category earlier too, but there is not much conversation about this fund in India. I just bumped into this NFO of Mahindra Manulife Mutual Fund’s news scheme – Arbitrage Yojana. And got an excuse to share it with you about this product category.
Recently I had mentioned about Bharat Bond Fund, safer than other debt funds. Though I can’t draw a product category parallel with the Arbitrage Yojana, but there is an interesting similarity of onething- that is the safety quotient.
Do you want to know – How to invest in Arbitrage Fund? Are Arbitrage Fund Good for individuals? Is it better than Liquid Fund for retail investors? Why to invest in arbitrage Funds and who can invest in Arbitrage Funds?
Arbitrage, an investment strategy that takes advantage of price difference of an asset in various scenarios. In this post, we will look at MahindraMMF’s Arbitrage Yojana which is an Equity Fund, it invests in equity and related market securities like other equity Mutual Fund. But, this category has a twist which is not discussed.
Let us discuss this category with help of Arbitrage Yojana NFO launched by Mahindra Manulife Mutual Fund. An Indian Arbitrage Fund, Arbitrage Yojana’s main focus is generating consistent returns from equity market through positioning trades to leverage the price difference between shares and derivative instruments, its focus is to locking-in profit, whether market goes down or up, this scheme category generates income in any market scenario. It uses four kinds of equity arbitrage opportunities – Exchange arbitrage, cash and carry Arbitrage, Basket of stock and corporate action driven arbitrage opportunity.
Like all other Equity Mutual Fund category, this mutual fund also follows an Index to compare its returns. For Arbitrage Funds, the Index is Nifty 50 Arbitrage Tri Index.
The focal point of the fund is hedging risk and generating consistent income. The strategy can be explained through the illustration below.
Exchange Arbitrage – The stock prices of same company can have a small difference in BSE and NSE platforms, in this case scheme, buy in one exchange and sell in another. These trades are often done in pre-set prices to maintain profit margin.
Cash And Carry Arbitrage – This strategy is implemented closer to contract expiry dates, (Ex Nifty has weekly derivatives contract expiry and stocks has monthly derivate expiry). In this strategy, Scheme place in trades to gain in from the price difference between Future contract and stock prices.
Basket of stock Arbitrage – For example, in this strategy, the scheme buys Nifty stocks in equal proportion as the nifty constituents of a certain value and sell the Nifty Futures for equivalent value.
Corporate Action Driven Abitrage – These are rare occurrences, when there is a visible and considerable difference in price available in case of big corporate action as mentioned in the illustration.
I have pulled out some information from the NFO document for easy illustration.
To invest or to know more about the fund –Click here
Arbitrage Fund category –
Risk – Moderate
1 year average return 5.5 %
Who can look at buying Arbitrage return – One who is looking at steady high post tax return in short term, who needs to keep some fund which doesn’t get affected by market volatility, one who is looking for an all season fund. Whatever the equity market condition may be or interest cycle movement, Arbitrage Fund offers a cushion from uncertain market movements. This investment is ideal for parking cash for short term horizon, it earns better post-tax returns compared to fixed deposits, risk is much lower almost nil compared to equity funds for short term investing horizon of 1-2 years.
Besides stability, it’s tax treatment is what makes it more attractive, as it deals more than 65% Equity, it gets tax treatment of an equity Fund.
About Mahindra Manulife Mutual Fund
This is a joint venture of Mahindra & Mahindra Financial Services Limited and Manulife Investment Management (Singapore) Pte. Ltd. brings together Mahindra’s domestic market strength and track record of successfully building businesses focused on meeting customer needs and Manulife’s global wealth and asset management capabilities and richness of experience in servicing the needs of Asian consumers across developed and developing markets. They are aiming to offer wide variety of investment solutions pan-India, with focus on semi-urban areas.
Our take
This is indeed an interestingly safe and good mutual fund category, which offers fixed income like return and taxed like equity. The best part about this category allows investor to earn profit of 5-7% yearly, an average fund generates about 5.5 -6% return in 1 period horizon. Interestingly, for short term profit booking, within a year, it is taxed at 15%, and in long term the return is taxed at 10% above the 1 lakh equity profit threshold. While the debt funds are taxed as per income tax slab upto 3 years. (Can have a tax burden of 34%)
You may visit the Mahindra Manulife Mutual Fund website for checking out full offer document and fund details.
Among others in this category, there are Nippon India Arbitrage Fund, Edelweiss Arbitrage Fund, L&T Arbitrage Fund, Kotak Equity Arbitrage Fund, you can check Valueresearchonline or moneycontrol for more information and insights in this fund category
This post is for sharing information and insight, it should not be considered as recommendation to buy, and one should consult their financial advisor before taking action.
In one of his rare interviews, Vivek kaul said, ‘I write for my mother’, implying that he tries to keep his writing style as simple as possible so that people with no economics background can understand it, I must say he has remained true to his words in his books.
Easy Money Triology is written by the renouned Indian columnist, Vivek Kaul, writes in many esteemed publications in India. In this blog post, I will be taking you through the second book – Easy Money, I happened to read this one first, jumping the row 😉
Easy money is available in Amazon in Hard copy, , Amazon Kindle and Amazon Audible app.Easy Money – the second book of Easy Money Triology, written by Vivek Kaul, Published by Harper Collins India.
‘The Evolution of The Global Financial System to the Great bubble burst’. The Book captures, how the global financial system evolved aftermath of the first world war, stretched economies of Europe, rise and rise of United States and leading upto dot com crash of 2001 and real estate bubble burst of 2008 and beyond.
Written in 10 chapters, this is a handbook captures economics of currency war, rise of Hitler, softening of European economies through ‘2nd world war’, the relationship of paper money with Gold. This book captures the economic evolution between early 20th century and early 21st century in view of major world currencies in the backdrop of Gold, petroleum and modern international trades. It meticulously cover the nuances of evolution of stock and bond market, interest rate movements leading upto easy availibility of money in Wall street leading to tech bubble burst and eventually real estate collapse.
Absorbing and grasping tale of history of modern global financial system is a must read for those who likes economics, finances, a fan of world history or an complete outsider of the subject. The narration is story like. It uses quotes extensively by economists and historians which makes the book very relatable. A perfect read for people who cares for financial literacy. This is a book on history of modern financial system or history of modern finance. The book elaborates on the major role played by the economists and politicians to acquire the resources and livelihood means for their countrymen to make their lives easy, striving to improve the living conditions and gradually supporting lifestyle.
Vivek Kaul’s trilogy on money unfolds the economic history to us detailing the important historic events and decisions which led to the current global economic situation. The subtle and structured narration takes readers through the ever evolving relationship of Gold and the ‘paper money’ of the countries, the journey of Yen, Rubble and how dollar navigated through the twists and turns of discovery phase of essential commodities of gold and crude oil through earth’s surface. How the gold and oil mine discoveries changed the relationship across Atlantic. It also takes us through the America’s relationship with middle east countries, Japan and Russia apart from the major European forces . The book is based on well researched facts. It takes extensive references from many classics written by world economic historians. The book shares a grasping tale of world economy with unbiased narrative. It’s focus remains the first world countries, India doesnt find a mention in the book. However, his third book Bad Money, captures the evolving NPA situation and its possible impact on Indian economy.
Chapters of the the book
Chapter 1 – Coup De Whisky
Chapter 2 – The Great Depression (1929 and beyond)
Chapter 3 – The Men Who knew too much
Chapter 4 – Hitles Falling, Dollar rising
Chapter 5 – Exhorbitant Priviledge
Chapter 6 – The American Promise
Chapter 7 – The Man who would be King
Chapter 8 – When a Tokyo Palace Became more expensive than California
Chapter 9 – Irrational Exuberance
Chapter 10 – But a pin lies in a wait for every bubble
The books quoted in the book are – Wealth of Nations, Paper Money, Extreme Money. It is a must read for economics and history enthusiast, an awesome account of history of Global Financial markets written by an Indian Author.
7.1% is the PPF Deposit rate for FY2020-21 (sep 2020), lowest in it’s history since 1986. This government guaranteed investment was launched in 1968 by ministry of finance for Indian residents. One of the popular tax saving instrument under section 80C, Public Provident Fund, is facing the wrath of low interest regime in India. So is PPF still a good tax saving option? Is PPF better than ELSS Mutual Fund? Can you invest in PPF Online? Is PPF better than Tax saving ELSS, let us have a quick low down on this investment instrument. Let’s address each question one by one.
What is PPF and how to invest in it?PPF is a fully government guaranteed investment option for resident Indians. One can open a PPF account in Public Sector Bank (PSB) like – State Bank of India, Bank of Baroda, Canara Bank etc also in private sector Bank like ICICI Bank, HDFC Bank, Axis Bank etc and designated Post Offices. PPF account can be opened with a minimum sum of Rs. 500. It has a maturity period of 15 years. One can transfer the account to other branch but not to any other Bank/ post office during its tenure. One person can open only one PPF account in own name at a time, however, one can open separate PPF account in the name of wife/husband or minor child (contribution cumulatively can be upto Rs. 1.5 lakhs for availing tax deduction). In a financial year one can invest between Rs. 500 to Rs.1 lakh 50 thousand according to Income tax law (Income tax act Section 80C) in India.
PPF account can be opened by visiting Bank branch with documents like Pan card and Aadhaar Card, also you can invest in PPF online through internet Banking. You can make direct transfer in PPF account from other Bank account through internet Banking.
Features of PPF Account
Though it has a fixed maturity of 15 years, incase of medical emergency, one can avail loan after 3 years and upto 6th year. One can make partial withdrawal beginning 7th year, however amount will be capped to 50% of 4th year balance. One can also close the PPF account after 5 years if needed. It has nomination option, one can nominate two person. However, to enjoy the compounding benefit, its recommended not to make partial withdrawals.
Benefits of Public Provident Fund account
It offers higher interest rate than bank fixed deposits. This is the only investment option which offers complete tax exemption under Section 80C, no conditions attached, during investment, accumulation and maturity withdrawal. One can make flexible deposit in this account every year, with deposit requirement of only Rs. 500 in a year and can deposit upto Rs. 1.5 lakh depending on investment requirements. This is a good long term debt option, it can be used for long term wealth creation because of the compounding effect and tax benefits.
How many time you can invest in PPF in a year?
One can make multiple investments and of any sum starting Rs. 500. PPF account remains active even if someone misses payment in some financial year.
Is PPF it better than NPS? Should you buy PPF?
These two financial products should not be compared. NPS has higher investment horizon (more than 20 years depending on entry age) as one can realise benefit after retirement, and it is designed to be used like a pension scheme, with partial withdrawal benefit on maturity, while PPF has fixed tenure of 15 years, can be extended for 5 more years but it has lumpsum withdrawal on maturity. NPS and PPF should not be mutually exclusive, one should have exposure in both as long termwealth creation/ funding retirement kitty.
Is PPF better than tax saving mutual Fund (ELSS)? How much to invest?
PPF is a high interest paying fixed income product which enjoys EEE tax benefit. ELSS enjoys minimum taxation of 10% on realised profit (above Rs. 1 lakh) every financial year. PPF gives a predicted return with compounding benefit. ELSS being a equity product has a potential of higher return over long term period, but all ELSS scheme doesn’t provide same returns. So, under section 80C – one should ideally divide investment in 4 options – ELSS, PPF, Term protection plan (Life insurance) and ELSS to maximise the benefits .
Is PPF Better the Fixed deposits?
PPF enjoys full tax benefits under incom tax section 80C is a long term product, enjoys higher return compared to Bank fixed deposits but, it is not useful if sudden money requirement arise. Fixed deposit interest are fully taxable (above Rs.10,000) as per tax slabs, but useful for emergency funds, can be withdrawn whenever needed. Also one can take over draft facility of 80% of the FD amount with only 1-2% interest rate more than fd rate. PPF partial withdrawal and loan facility available but not easy to avail. So, for short term requirement upto 1-2 years, FD/ liquid mutual fund is a good option. But if your PPF maturity is near, say between 1-2 years, you can invest more money in PPF as you ll get all returns tax free with higher interest income.
Fixed deposit is an one time investment, but PPF is designed like a bank account which has limited withdrawal option and only keeps accumulating upto maturity.
If you have further queries on PPF investment option, write in the comment box. You can post your queries in debashree.ad@gmail.com
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