Do you want to save your hard earned money and use it for a rainy day? Investments will make your money to grow for you, maximize your earning potential and keep you out of trouble.
But there is a silent killer called inflation which pulls down the value of your savings. In order to protect your savings from inflation, you need to put it in the bank or invest it somewhere else. So that you could earn interest higher than inflation and beat it.
So start invest before inflation liquidates your savings. The higher the return you expect from your investments, the higher the risk you will have to take. You could put your savings in a government bond or Public Provident Fund which have almost a zero risk investments. On the other hand, you have equities, which come with a high degree of risk. So do gold and real estate.
The risk associated with each investment changes with time and must be monitored carefully. You can structure your investments based on your appetite for risk.
Short-Term And Long-Term Financial Investments Options
1. Savings Bank Account
A Savings Account in a bank or any financial institutions allows you to store cash safely and earn interest on your money. It is best suited for salaried employees or people with a regular monthly income. You don’t have to worry about the minimum balance as it is very low. The main purpose of a savings account is to encourage you to save more.
Savings bank accounts generally offer you an interest rate which is slightly higher than monster inflation. It keeps the real value of your hard money stable throughout the years. With the help of Savings accounts, you can pay bills, make quick transactions, and much more.
Check the banks which are providing best Savings Account Interest Rates in India
|Savings Account Interest Rates|
|Savings Account||Interest Rate Offered|
|RBL Bank||7.1% p.a = Daily balance above Rs.10 lakhs
6.1% p.a = Daily balance above Rs.1 lakh
5.1% p.a = Daily balance upto Rs.1 lakh
|Yes Bank||6% p.a. (On Savings Account balances below Rs.1 crore.)|
|Kotak Mahindra Bank||6% p.a|
|Lakshmi Vilas Bank||5% p.a = Daily Balance Upto Rs.5 lakh 6% p.a = Above Rs.5 lakh|
|IndusInd Bank||4% p.a = Daily balance upto Rs.1 lakh
5% p.a = Daily balance above Rs.1 lakh but less than Rs.10 lakhs
6% p.a = Daily balance above Rs.10 lakhs
4% p.a = Non-resident NRO and NRE accounts
|Bandhan Bank||4.25% p.a = Daily balance upto Rs.1 lakh.
5% p.a = Daily balance above Rs.1 lakh.
|HDFC Bank||4% p.a = Effective from December 1, 2015|
|Axis Bank||4% p.a|
2. Bank Fixed Deposit (Bank FDs)
A fixed deposit account is an investment which offers you an interest rate higher than that of a savings account. You can fix the amount for a period ranging from a few days to 10 years and earn higher returns. If you close the fixed account prematurely then you will be levied penalty charges by the banks.
The interest rate you will get depends on the amount deposited, tenure, and prevailing market rates and may vary from one bank to another. Even you will get the benefits of the power of compounding on your fixed deposits. You can avail overdraft or loan facilities from the bank against the amount in your fixed deposit accounts.
Fixed Deposit Interest Rates for Top Banks – 2017
|Fixed Deposits with Bank||Tenure (Min-Max)||Interest Rates for Regular Deposit|
|State Bank of India||7 days-10 years||5.25% p.a.-7.00% p.a.|
|HDFC Bank||7 days-10 years||3.50% p.a.-7.25% p.a.|
|ICICI Bank||7 days-10 years||4.00% p.a.-7.50% p.a.|
|Axis Bank||7 days-10 years||3.50% p.a.-7.50% p.a.|
|Punjab National Bank||7 days-10 years||4.25% p.a.-7.50% p.a.|
|Bank of India||7 days-10 years||4.00% p.a.-7.25% p.a.|
|Canara Bank||7 days-10 years||4.00% p.a.-7.50% p.a.|
|Indian Bank||7 days-More than 3 years||5.00% p.a.-7.25% p.a.|
|Bank of Baroda||7 days-10 years||4.50% p.a.-7.30% p.a.|
|Bandhan Bank||7 days-10 years||3.50% p.a.-8.00% p.a.|
|Kotak Mahindra Bank||7 days-10 years||4.00% p.a.-6.75% p.a.|
|Union Bank||7 days-10 years||5.00% p.a.-7.25% p.a.|
|Indian Overseas Bank||7 days-10 years||4.00% p.a.-6.75% p.a.|
|Central Bank of India||7 days-10 years||4.00% p.a.-7.00% p.a.|
|Bank of Maharashtra||7 days-10 years||4.75% p.a.-6.80% p.a.|
|IDFC Bank||7 days-10 years||4.00% p.a.-8.25% p.a.|
|State Bank of Travancore||7 days-10 years||5.50% p.a.-6.95% p.a.|
|Yes Bank||7 days-10 years||5.50% p.a.-7.15% p.a.|
|Corporation Bank||7 days-10 years||5.00% p.a.-7.10% p.a.|
|Andhra Bank||7 days-10 years||4.00% p.a.-7.00% p.a.|
|State Bank of Hyderabad||7 days-10 years||5.50% p.a.-7.00% p.a.|
|RBL Bank||7 days-20 years||5.00% p.a.-7.85% p.a.|
|IDBI Bank||15 days-20 years||4.25% p.a.-7.15% p.a.|
3. Post Office Savings Schemes (POSS)
You can avail the benefit of assured returns on the Post Office Savings Schemes with the low-risk factor. The scheme also offers you several benefits including portability of account from one post office to another. Also, you have an option of extending the deposit on maturity and you are eligible for savings account interest rate for two years.
Currently, you will get the interest on POSS is around 7% to 7.8% for a period of up to 5 years. The tenures for your fixed deposit range from one to five years with the facility to draw yearly interest at compounded rates. Although interest income is taxable and TDS certificate is not issued to you under the scheme. You cannot open POSS for Group accounts, institutional accounts, Trust, regimental fund or welfare fund.
4. Public Provident Fund (PPF)
The Public Provident Fund (PPF) Scheme, is a tax-free savings schemes. Your interest earned on deposits in the PPF account is not taxable and can be claimed as tax deductions. This makes the PPF Scheme one of the most tax-efficient schemes in India. It is long-term, compounded, tax-free returns and capital protection which make this an ideal option for building a retirement corpus.
You can deposit funds in PPF accounts (Public Provident Fund accounts) for a fixed period of time. The PPF interest rate is 8.1% on your savings. Minimum deposit requirements are also very low and affordable and easily accessible. It is a safe scheme and simple to understand which makes it a popular investments avenue for a large majority of individuals in India. You can open PPF accounts at any nationalized bank and post offices.
5. Bonds and Debentures
A Debenture is a debt investments product which is not backed by any specific stock. Corporate treasury uses this to raise medium to long-term funds. However, Bonds in India are typically issued by financial institutions, government undertakings, and large companies. It is more like a form of loan where you will be the lender of the bond and the issuer of the bond is the borrower.The interest rate is assured by the company and is paid at a fixed interval.
In the case of government, raising the same helps in funding its current expenditure. However, corporate bonds are issued by companies and offer interest rates higher than bonds issued by public sector units and other financial institutions.
6. Mutual Funds
Mutual funds allow you to invest your money into a diversified selection of stocks, managed by a professional fund manager. It offers you invest in mutual funds products like fund of funds, exchange-traded funds, Fixed Maturity Plans, Sectoral Funds and much more.
Mutual Funds help you to achieve better returns by beating inflation. Mutual Funds provide an ideal investments option to place your savings for a long-term. It allows purchasing power of your hard-earned money and does not erode over the years due to inflation.
Mutual funds have the potential to generate a higher return for you as you can invest in a diverse range of sectors and industries. Fund managers provide you information about the value of your investments on regular basis.
7. Equity Shares
Equity shares holders are the real owners of the company. If you invest in the stock market then you will have a control over the working of the company. You will get the dividend on the shares you are holding and the rate of dividend on these shares depends upon the profits of the company.
As equity shareholders, you have voting rights and can elect the management of the company. Over the long term, you can expect a maximum return on investments in equity shares. As an investments option, investing in equity shares is also perceived to carry a high level of risk.
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Published on: Oct 6, 2017