Market linked debt schemes yield higher

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

   Debt schemes and government - backed instruments have always been the choice of the risk-averse and investors in their retirement years who seek a stable income. Bank recurring deposits and fixed deposits that earn a fixed income are popular along with the post office savings deposit, term deposit and monthly income scheme (MIS). These are simple investment schemes that guarantee a fixed inflow and come with near zero risk.

   However, things are a tad different now. While the interest rates on post office savings schemes remain fixed throughout the term of the scheme, the Public Provident Fund (PPF) needs to be understood by the investor. It is a 15-year scheme where the interest rates will not remain fixed for the entire period. The annual interest accruals in a PPF account will depend on the rate for that particular year. How are the rates arrived at?

   The rate will be linked to the government security market (G-sec). The advantage is that since the rates are inter-twined with the market rates, your investment will fetch you higher returns in a high interest regime.

   You will not be anchored to a past low number. However, most debt instruments take a beating in times of high inflation. Inflation-adjusted returns sometimes go into negative territory.

   An investor can get the real rate of return only after factoring in inflation and the tax component that chew into earnings. With a soaring inflation over the past few months, the returns on most debt schemes after adjusting for inflation have gone negative. When rates are linked to the markets, the investor stands to benefit in times of higher rates.

   On the flip side, variable interest rates remove the predictability component from these small schemes preferred by risk-averse investors. This makes financial planning more of a challenge for small investors. Senior citizens who anticipate a regular income and do not have adequate resources for strategising investments may find it tougher. Returns during the periods of low interest rates could affect cash inflows.

   Going back to the PPF, with effect from December 1, 2011, the government increased the interest rate to 8.6 percent from eight percent. Further, the ceiling on annual contributions to the fund has been raised to Rs 1 lakh from Rs 70,000. Variable interest rates will make the corpus at the end of a 15-year period difficult to predict.

   Lack of predictability will remove some of the sheen out of these products. Instruments like the PPF were an essential part of a retirement corpus or long-term goals such as children's marriage and education expenses. With the element of uncertainty creeping into it, financial planning needs to be done with a bit more prudence.

   Yet, the PPF will still remain the old faithful for small investors.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. HDFC TaxSaver
2. ICICI Prudential Tax Plan
3. DSP BlackRock Tax Saver Fund
4. Birla Sun Life Tax Relief '96
5. Reliance Tax Saver (ELSS) Fund
6. IDFC Tax Advantage (ELSS) Fund
7. SBI Magnum Tax Gain Scheme 1993
8. Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

 

 

 

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