Retired DGM , Indian Overseas Bank
FALLING INTEREST RATES
After a year in 2013 , Rent became Rs 10,500 as Rent agreement had a clause of 5 % annual increase . With inflation rate of 10 % , his expenses grew to Rs 22,000 per month . he managed to contain his miscellaneous expenses to Rs 5,000 . Still he could manage to save Rs 2,500 per month .
In 2014 , Rent became Rs11,000 , family expenses became Rs 23, 300 with an inflation of 6 % . he tightened the belt and continue to manage his miscellaneous expenses with Rs 5,000 only . But now his savings were paltry Rs 700 per month only . But still he could live within his income .
In 2015 , rent became Rs 11, 500 , family expenses grew to Rs 24, 500 and savings turned negative of Rs 1, 000 and the shortfall he financed from the savings he had in 2013 .
In 2016 , rent became Rs 12,000 , family expenses grew to Rs 25,700 and monthly shortfall grew to Rs 2,700 month . Most of his savings in 2013 and 14 were utilized towards the shortfall . He could manage .
Now , when Mr Suresh went to the bank to renew his deposit , shock was awaiting him . Bank manager told him that interest rate is just 6.75 % and he would get a monthly payment of Rs 28,000 only . Mr Suresh is in a dilemma now whether to renew and if renewed how to manage both ends . He is also looking for other avenues to shift his investment for better yield .
Now what are the avenues open to Mr Suresh ? . He doesn't want to risk his money with investment in doubtful / shady concerns who promise him a very high return . He wants both safety of capital and a reasonably good return to manage his household .
We are trying to explore possible alternatives and listing out the options available , keeping safety of capital as prime concern .
GOVERNMENT BACKED INVESTMENT AVENUES
SENIOR CITIZEN SAVINGS SCHEME ( SCSS ) :
The scheme is operated by Indian post and available in post offices throughout India . A senior citizen can invest a maximum of Rs 15 lakhs in the scheme . Maturity after 5 years with an interest of 8.3% quarterly compounded and interest payable quarterly .
LIC VARISHTA BIMA YOJANA 2017
The scheme is operated by Life Insurance Corporation of India . The scheme is for 10 years and fetches interest rate of 8 % pa . Interest in form of pension is payable monthly . A maximum amount of Rs 7.5 lakhs can be invested by senior citizens .
GOI 8% ( TAXABLE ) BOND 2003
The bonds issued by reserve Bank of India and are sold through SBI , Nationalised Banks and few private sector banks like ICICI , HDFC etc . Bond is issued for a period of 6 years . As name suggests , interest rate is 8 % taxable . One can receive interest annually or at the time of maturity .
NATIONAL SAVINGS CERTIFICATE :
The scheme is operated by Indian post and available in post offices throughout India . Investment in the scheme gets tax rebate under 80 c of the income tax act . Scheme is for 5 years . Interest at 7.8 % pa and payable only on maturity .
TIME DEPOSIT ACCOUNT WITH POST OFFICE :
One can deposit any amount and a deposit of 5 years fetches interest of 7.6 % with annual payment of interest
MONTHLY INCOME SCHEME OF INDIAN POST ( MIS )
The scheme is operated by Indian post and available in post offices throughout India . One can invest a maximum of Rs 4.5 lakhs in the scheme . Maturity after 5 years with an interest of 7.5 % pa with monthly payment of interest .
KISAN VIKAS PATRA ( KVP )
The scheme is operated by Indian post and available in post offices throughout India . The scheme is for 115 months and 7. 5% pa and payable only on maturity .
DEBT MUTUAL FUNDS
Now for Suresh ,whatever the decision he takes for optimizing tax benefit , return and safety , his investment income is bound to be lesser than what he was getting with the bank at 9.75 % . He has to reduce his expenses to manage his finance .
Readers are free to offer suggestions to Mr Suresh for better returns .
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