20 Investments

Even though there are many avenues for investing, I will discuss the benefits of investing in just 2 of them.  Both of them are government sponsored ones – Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY).  The SSY is only for those who have a daughter aged below 10 years of age.

Let us take the PPF account first.  It can be opened in any post office or some of the nominated banks like SBI and ICICI banks.  The deposit can range from Rs 500 to Rs 1,50,000 per year.  You will have to invest at least Rs 500 in this account so that it does not become dormant.  You cannot close this account before 15 years.  At the end of 15 years, if you still don’t want to withdraw, you can extend it for another period of 5 years and so on.  Current year’s rate of interest is 7.9% compounded annually.

Assuming we invest Rs 1,50,000 on 1^st April each year and take 7.9% interest as being constant for the next 15 years, you are looking at a final sum of Rs 47 lakhs approx.  Over a period of 15 years, you have invested Rs 22.5 lakhs and you end up getting Rs 47 lakhs.  This entire amount is tax free!!  Moreover, you also get Sec 80C benefit in income tax calculation.  For details of the scheme please refer to https://www.indiapost.gov.in/Financial/Pages/Content/PPF-Account.aspx

Now let me come to the SSY account.  One can invest only if one has a daughter aged less than 10 years.  You have to invest for 14 years continuously and your daughter can take out the money at the end of 21 years.  In case your daughter gets married, you can withdraw the entire amount.

Assuming we invest Rs 1,50,000 on 1^st April each year and take 8.4% interest as being constant for the next 21 years, you are looking at a final sum of Rs 71.2 lakhs approx. after the end of 21 years.  Over a period of 14 years, you have invested Rs 21 lakhs and you end up getting Rs 71.2 lakhs at the end of 21 years.  This entire amount is tax free!!  Moreover, you also get Sec 80C benefit in income tax calculation.  For details of the scheme please refer to https://www.indiapost.gov.in/Financial/Pages/Content/SukanyaSamriddhiAccounts.aspx

Both these schemes provide you with a good opportunity to invest and make money without any tax outgo.  The rates of interest may change for each year and the final figure computed above may not be accurate in that case.  There is no risk in these 2 schemes and you can make a decent amount of corpus, either for your retirement or for your daughter. 

PPF can be opened by both the husband and wife separately and investments can be done on both accounts.  And both can claim Sec 80C benefit towards income tax calculation. For SSY, only one of the husband or wife can claim the Sec 80C benefit.

Happy investing!! Cheers!!

Today’s daffy definition

Bachelor – A man who never Mrs anyone!!