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Fixed Income Investment Solutions

Fixed Income Investment Solutions

Post Office Recurring Deposit

The Post Office Recurring Deposit is a mid-term savings scheme where depositors are required to park their investments for a minimum of 5 years. Since the recurring deposit does not depend on the market, it is deemed risk-free and caters to investors with a lower risk appetite, as well as, investors who are depositing their money in a scheme for the first time. The recurring deposit scheme requires a fixed sum to be deposited into the account at regular intervals for which interest is accrued on them and compounded quarterly.

For the investors who like security on their investments and wish to earn a steady sum of money as interest, the Post Office RD would be an ideal investment. Moreover, this scheme would be also beneficial for the people to earn a fixed sum of money and wish to generate over time and earn a fixed income.

National Pension System (NPS) Scheme

National Pension System (NPS) is a retirement benefit Scheme introduced by the Government of India to facilitate a regular income post retirement to all the subscribers. PFRDA (Pension Fund Regulatory and Development Authority) is the governing body for NPS. National Pension System (NPS) is based on a unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber. In order to encourage savings, the Government of India has made the scheme reassuring from a security point of view and has offered some attractive benefits for NPS account holders.

Fixed Return Plans with Insurance

Most life insurance products follow exempt-exempt-exempt (EEE) taxation. It means, there is tax benefit available on investment, there is no tax on accrual and when product matures. This is true where the sum assured is at least seven to ten times that of annual premium.

Compared to post-tax returns of banks in the current environment, these products can give better returns for young policyholders – below 40. Returns are better for young policyholders as mortality rates – money that goes towards insuring the customer – are lower. For older customers, the mortality rates are higher and consequently, their returns would fall.

The long-term (5-10 years) deposit rate of State Bank of India is 5.4%. For a depositor in the 30% tax bracket, the post-tax returns would work out to be below 4%. In a guaranteed insurance plan, the returns are tax-free. If an insurance company is able to deliver above 5% returns in the long term, it would be attractive to traditional FD investors.

Company Fixed Deposits 

The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.

Mutual Funds

Income Funds: Income funds aim at generating income at regular intervals of time. They do not seek capital appreciation in the long run, and are ideal for those who seek regular cash flow to meet their financial requirements. The corpus of these funds is invested mainly in income instruments such as bonds, fixed interest debentures, dividend paying stocks, preference stocks, etc.

Capital Protection Funds: Capital protection funds which chiefly invest in debt securities and partly in equities aim to protect investors’ capital. The delivered returns are relatively low and the investors should remain invested for at least 3 years.

Fixed Maturity Funds: Fixed maturity funds make investments in money markets, securities, bonds, etc. and are closed-ended plans that come with fixed maturity periods. The tenure of these funds could extend from a month to 5 years.

Debt Funds: Debt funds chiefly invest in low-risk fixed-income instruments such as government securities. Since these funds come with a fixed maturity date and interest rate these are ideal for investors with low-risk appetite.

Money Market Funds: Money market funds invest in easily accessible cash and cash equivalent securities and offer returns as regular dividends. These funds come with relatively lower risk and are ideal for short term investment.

Money Market Funds (MMF): Another low-risk investment medium, this fund invests in the steady-income money markets like treasury bills, commercial bills or papers, bank certificates, etc. Money Market Funds have a lock-in period of 15 days and are ideal for short-term investments. Since these funds invest your money in high-quality markets, it offers risk-free returns.

Exchange-Traded Funds (ETF): These are index funds and trade on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as stocks. ETFs trade on a day to day basis and there is no limit on the number of units you can buy. They help in diversifying your investment portfolio, and intraday trade provide high liquidity to your investment.

Hi Yield Investment Solutions

Stocks

Stocks are fractional pieces of publicly traded companies. If you own a company’s stock, you own a piece of that company. All companies need money to run their business. Sometimes the profit acquired from selling goods or services is not sufficient to meet the working capital requirements. And so, companies invite normal people like you and me to put some money in their company so that they can run it efficiently and in return investors get a share of whatever profit they make. Understanding this is the first step towards understanding stock market basics.

Mutual Funds

Equity Funds : Equity funds make investments mainly in stocks of companies. Equity funds are the most preferred investment options among the majority of investors as these offer high returns and quick growth.

Hybrid or Balanced Funds: Balanced or hybrid funds invest a certain amount of their corpus into equity funds and the rest in debt funds. Though the risk involved with these funds is relatively high, the generated returns are equally high.

Aggressive Growth Funds: Aggressive Growth funds carry a relatively high level of risk and are designed to generate steep monetary returns. Although these funds are prone to market volatility, they have the potential to deliver impressive returns.

Growth Funds: Growth funds invest a large portion of their capital into stocks of companies having above-average growth. The returns offered by these funds are relatively high, but the risk involved along with is also quite high.

Income Funds: The corpus of income funds is invested in a combination of high dividend generating stocks and government securities. These funds focus on offering regular income and impressive returns to investors investing for more than two years.

Value Funds: The main objective of value funds is to make investments in undervalued stocks and achieve profits when the inefficiencies are corrected.

Real Estate

Like all investments, real estate involves risks – and the expected returns on investment usually vary commensurately with the riskiness of a particular project. Here, we review some of the more basic risks involved with all kinds of investments. Risk is the possibility of suffering adverse consequences.

Real estate investing can be lucrative, but it’s important to understand the risks. Key risks include bad locations, negative cash flow, high vacancies, and problem tenants. Other risks to consider are the lack of liquidity, hidden structural problems, and the unpredictable nature of the real estate market.

Fixed Income Investment Solutions

Fixed Income Investment Solutions

Post Office Recurring Deposit

The Post Office Recurring Deposit is a mid-term savings scheme where depositors are required to park their investments for a minimum of 5 years. Since the recurring deposit does not depend on the market, it is deemed risk-free and caters to investors with a lower risk appetite, as well as, investors who are depositing their money in a scheme for the first time. The recurring deposit scheme requires a fixed sum to be deposited into the account at regular intervals for which interest is accrued on them and compounded quarterly.

For the investors who like security on their investments and wish to earn a steady sum of money as interest, the Post Office RD would be an ideal investment. Moreover, this scheme would be also beneficial for the people to earn a fixed sum of money and wish to generate over time and earn a fixed income.

National Pension System (NPS) Scheme

National Pension System (NPS) is a retirement benefit Scheme introduced by the Government of India to facilitate a regular income post retirement to all the subscribers. PFRDA (Pension Fund Regulatory and Development Authority) is the governing body for NPS. National Pension System (NPS) is based on a unique Permanent Retirement Account Number (PRAN) which is allotted to every subscriber. In order to encourage savings, the Government of India has made the scheme reassuring from a security point of view and has offered some attractive benefits for NPS account holders.

Fixed Return Plans with Insurance

Most life insurance products follow exempt-exempt-exempt (EEE) taxation. It means, there is tax benefit available on investment, there is no tax on accrual and when product matures. This is true where the sum assured is at least seven to ten times that of annual premium.

Compared to post-tax returns of banks in the current environment, these products can give better returns for young policyholders – below 40. Returns are better for young policyholders as mortality rates – money that goes towards insuring the customer – are lower. For older customers, the mortality rates are higher and consequently, their returns would fall.

The long-term (5-10 years) deposit rate of State Bank of India is 5.4%. For a depositor in the 30% tax bracket, the post-tax returns would work out to be below 4%. In a guaranteed insurance plan, the returns are tax-free. If an insurance company is able to deliver above 5% returns in the long term, it would be attractive to traditional FD investors.

Company Fixed Deposits 

The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.

Mutual Funds

Income Funds: Income funds aim at generating income at regular intervals of time. They do not seek capital appreciation in the long run, and are ideal for those who seek regular cash flow to meet their financial requirements. The corpus of these funds is invested mainly in income instruments such as bonds, fixed interest debentures, dividend paying stocks, preference stocks, etc.

Capital Protection Funds: Capital protection funds which chiefly invest in debt securities and partly in equities aim to protect investors’ capital. The delivered returns are relatively low and the investors should remain invested for at least 3 years.

Fixed Maturity Funds: Fixed maturity funds make investments in money markets, securities, bonds, etc. and are closed-ended plans that come with fixed maturity periods. The tenure of these funds could extend from a month to 5 years.

Debt Funds: Debt funds chiefly invest in low-risk fixed-income instruments such as government securities. Since these funds come with a fixed maturity date and interest rate these are ideal for investors with low-risk appetite.

Money Market Funds: Money market funds invest in easily accessible cash and cash equivalent securities and offer returns as regular dividends. These funds come with relatively lower risk and are ideal for short term investment.

Money Market Funds (MMF): Another low-risk investment medium, this fund invests in the steady-income money markets like treasury bills, commercial bills or papers, bank certificates, etc. Money Market Funds have a lock-in period of 15 days and are ideal for short-term investments. Since these funds invest your money in high-quality markets, it offers risk-free returns.

Exchange-Traded Funds (ETF): These are index funds and trade on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as stocks. ETFs trade on a day to day basis and there is no limit on the number of units you can buy. They help in diversifying your investment portfolio, and intraday trade provide high liquidity to your investment.

Hi Yield Investment Solutions

Stocks

Stocks are fractional pieces of publicly traded companies. If you own a company’s stock, you own a piece of that company. All companies need money to run their business. Sometimes the profit acquired from selling goods or services is not sufficient to meet the working capital requirements. And so, companies invite normal people like you and me to put some money in their company so that they can run it efficiently and in return investors get a share of whatever profit they make. Understanding this is the first step towards understanding stock market basics.

Mutual Funds

Equity Funds : Equity funds make investments mainly in stocks of companies. Equity funds are the most preferred investment options among the majority of investors as these offer high returns and quick growth.

Hybrid or Balanced Funds: Balanced or hybrid funds invest a certain amount of their corpus into equity funds and the rest in debt funds. Though the risk involved with these funds is relatively high, the generated returns are equally high.

Aggressive Growth Funds: Aggressive Growth funds carry a relatively high level of risk and are designed to generate steep monetary returns. Although these funds are prone to market volatility, they have the potential to deliver impressive returns.

Growth Funds: Growth funds invest a large portion of their capital into stocks of companies having above-average growth. The returns offered by these funds are relatively high, but the risk involved along with is also quite high.

Income Funds: The corpus of income funds is invested in a combination of high dividend generating stocks and government securities. These funds focus on offering regular income and impressive returns to investors investing for more than two years.

Value Funds: The main objective of value funds is to make investments in undervalued stocks and achieve profits when the inefficiencies are corrected.

Real Estate

Like all investments, real estate involves risks – and the expected returns on investment usually vary commensurately with the riskiness of a particular project. Here, we review some of the more basic risks involved with all kinds of investments. Risk is the possibility of suffering adverse consequences.

Real estate investing can be lucrative, but it’s important to understand the risks. Key risks include bad locations, negative cash flow, high vacancies, and problem tenants. Other risks to consider are the lack of liquidity, hidden structural problems, and the unpredictable nature of the real estate market.

Copyright © Twins Consultancy all rights reserved. DISCLAIMER : The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Twins Consultancy Group is not liable for any decision arising out of the use of this information.