6 Investment Worries Solved for You

By | June 6, 2015


Amitabh Bachchan might be in trouble for endorsing Maggi, but we still trust him. After all, he asked us to get checked for TB, made sure every kid got Polio drops and told us to have Chyavanprash every day. These might not have been our favorite activities, but we still trust the Big B. He’s a much loved Superstar after all and seems to have answers for everything.
Just like Bade Miyaan, we thought we’ll rustle up a few answers of our own for oft asked investment queries. Like the below.


How can I get the highest interest rates on FD?

Each bank fixes their FD rates as per their financial credentials. The Reserve bank of India’s repo rate policy is used by them as a financial yardstick. Any change in the repo rate policy may force banks to increase or decrease the interest rates.

The best way to get the highest interest rate for your fixed deposit is to compare interest rates being offered by various banks. Smaller banks or lesser known banks sometimes offer a slightly higher interest rate as compared to the well-known banks.

This is because, such banks usually witness a lower number of potential depositors in their banks. Since raising money from the money market is far more expensive for such banks, they try to attract depositors with a higher interest rate on fixed deposits. It’s like honey for the bears.

Is it wise to discontinue a non performing ULIP?

There can be nothing worse than a non performing unit linked insurance plan, as it can make a big dent in your financial plan. Since ULIPs are usually risky investments, it is good to keep an eye on the returns generated by your plans. If it is underperforming, in the long run, it’s always better to discontinue the policy rather than waiting for it to work.

However, before you decide on discontinuing ULIP, make sure to discuss it with a financial advisor. In the past, many people have bought ULIPs to avoid pestering, irritating insurance agents or have been sold ULIPs wrongly. Talking to a certified financial planner can bring clarity about the ULIP and its possible returns.

Which sectors are good for investment?

In every economic growth cycle, some sectors outperform others over a period of time. This does not make them superior or give a guarantee of the future growth prospects. A sector on the rise today can be stagnant over the next couple of years. It all depends on the economic policies of the government and the future goals and aspirations of that sector.

Considering all of the above points, there is a strong case for investing in infrastructure, pharmaceutical and the energy sector today. The government is giving due diligence to all these sectors and FDIs are also pumping in money.
Furthermore, you can also consider other sectors which are open for more FDI investment for better gains, such as real estate and insurance.

What is the ideal time to start a PPF account?

There cannot be one-size-fits-all timeline to open a PPF account. A PPF account has a maturity period of 15 years with a further extension of five years. Some parents like to open PPF accounts for their children to give them a good corpus once they turn 18 years of age.
As far as the ideal time is concerned, one should strive to open a PPF account between 1st and 5th of April to allow for a maximum interest period since PPF accounts follow an April-to-March financial year cycle. This gives you an interest advantage.

Is debt fund better than FD?

Both fixed deposits and debt funds are excellent investments for those who are looking for safe investment options. Debt funds invest in government bonds and secure financial instruments, offering secure returns.

A useful feature of debt funds is that there is no tax deduction at source (TDS) on the gains. But in fixed deposits, banks deduct TDS if the interest income exceeds the minimum limit of Rs. 10,000 in one financial year. You can submit form 15H or 15G to avoid TDS deduction.
Unlike FDs, where a lump sum amount is invested, you can use the SIP route for debt funds. Debt funds, however, come with a minimum exit period. Redeeming your funds before that can mean payment of an exit load which can vary from 0.5% to 2%. Leave too soon and you miss the party.

What are the benefits of buying insurance online?

One of the biggest advantages of buying life insurance and health insurance online is that it saves time, money and effort. You can simply log in, choose the appropriate insurance plan, pay the premium and get the insurance documents as a soft copy in your email. No more numerous, prolonged trips to the insurance company and falling for silver tongued agents.

Apart from these benefits, insurance companies offer online insurance cheaper than regular insurance since they are able to save on costs and agent commissions. Online insurance is therefore more cost effective. You can easily compare insurance quotes from multiple insurance companies and pick the right plan for your need.

Hopefully, all your insurance plans have you covered considering all the Maggi that has been a part of your life since the wonder years. We jest! (We’re a little worried too.)

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