Investment Instruments and Various Terms Related to Investment
Major Attractions of PPF :
(1)Risk Free Investment Instrument.
(2)Helps to create Retirement corpus and hence a long term investment instrument.
(3)Interest Earned and the Returns are not taxable.
(4)Deduction of Maximum Rs.1,50,000 is allowed under section 80C of Income Tax Act for Investment made in PPF.
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Major Attractions of PPF :
(1)Risk Free Investment Instrument.
(2)Helps to create Retirement corpus and hence a long term investment instrument.
(3)Interest Earned and the Returns are not taxable.
(4)Deduction of Maximum Rs.1,50,000 is allowed under section 80C of Income Tax Act for Investment made in PPF.
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Key Points of SGB :
(1)Alternative for Investors investing in GOLD in physical Form.
(2)Under this scheme gold is held in electronic form so no risk of theft.
(3)Long term Investment Option and has low risk as it is backed by government of India.
(4)Lock-in period of 8 years you also have the option to exit after 5 years.
(5)Guaranteed Annual Interest of 2.5% which is taxable but a better option than holding physical gold which doesn't earn any interest.
(6)Capital Gains are exempted from Income Tax if redeemed after maturity, a plus point of holding gold in this form.
(7)Can be used as a collateral for getting Loan from Banks.
(8)The Government sells these bonds through banks, Stock Holding Corporation of India limited and selected post office.
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Key Points of SGB :
(1)Alternative for Investors investing in GOLD in physical Form.
(2)Under this scheme gold is held in electronic form so no risk of theft.
(3)Long term Investment Option and has low risk as it is backed by government of India.
(4)Lock-in period of 8 years you also have the option to exit after 5 years.
(5)Guaranteed Annual Interest of 2.5% which is taxable but a better option than holding physical gold which doesn't earn any interest.
(6)Capital Gains are exempted from Income Tax if redeemed after maturity, a plus point of holding gold in this form.
(7)Can be used as a collateral for getting Loan from Banks.
(8)The Government sells these bonds through banks, Stock Holding Corporation of India limited and selected post office.
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Key Points of Gold ETF's :
(1)They are Just like stocks and are traded similarly on stock exchange.
(2)They are Commodity based Mutual Funds that invests in assets like Gold.
(3)When investor invest in these funds they are credited with unit's equivalent in cash instead of actual gold.
(4)No Risk of theft and a better option then holding the physical gold.
(5)No Extra Cost of Purchasing and selling as in the case of physical gold.
(6)Gold ETF's charges only 0.5% to 1% brokerage.
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Key Points of Gold ETF's :
(1)They are Just like stocks and are traded similarly on stock exchange.
(2)They are Commodity based Mutual Funds that invests in assets like Gold.
(3)When investor invest in these funds they are credited with unit's equivalent in cash instead of actual gold.
(4)No Risk of theft and a better option then holding the physical gold.
(5)No Extra Cost of Purchasing and selling as in the case of physical gold.
(6)Gold ETF's charges only 0.5% to 1% brokerage.
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Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account.
During online trading, shares are bought and held in a Demat account, thus facilitating easy trade for the users.
In India, Demat account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant / Stock Broker . The charges of Demat account vary as per the volume held in the account, type subscribed, and the terms and conditions laid by the depository and the stock broker.
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Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account.
During online trading, shares are bought and held in a Demat account, thus facilitating easy trade for the users.
In India, Demat account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant / Stock Broker . The charges of Demat account vary as per the volume held in the account, type subscribed, and the terms and conditions laid by the depository and the stock broker.
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Key Points :
(1)As the name suggest, Transfer - It is a systematic transfer of funds from one plan to another instantaneously and without any hassles.
(2)This Transfer occurs periodically and hence helps an investor to gain market advantage by shifting to securities that offer a higher return.
(3)It helps an investors during market fluctuations to minimize the loss.
(4)Funds can only be transferred to other schemes which are managed under the same Asset Management Companies(AMC), means inter shifting b/w various schemes offered by different AMC's are not allowed.
(5)Types of STP :
(i) Flexible STP : the amount to be transferred are decided by the investor as and when the need arises.
(ii) Fixed STP : Total amount to be transferred is decided by the investor and it remains fixed.
(iii)Capital systematic transfer plans : transfer the capital gain of a fund to another fund with a high potential for growth.
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Key Points :
(1)As the name suggest, Transfer - It is a systematic transfer of funds from one plan to another instantaneously and without any hassles.
(2)This Transfer occurs periodically and hence helps an investor to gain market advantage by shifting to securities that offer a higher return.
(3)It helps an investors during market fluctuations to minimize the loss.
(4)Funds can only be transferred to other schemes which are managed under the same Asset Management Companies(AMC), means inter shifting b/w various schemes offered by different AMC's are not allowed.
(5)Types of STP :
(i) Flexible STP : the amount to be transferred are decided by the investor as and when the need arises.
(ii) Fixed STP : Total amount to be transferred is decided by the investor and it remains fixed.
(iii)Capital systematic transfer plans : transfer the capital gain of a fund to another fund with a high potential for growth.
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(1)NPS is basically a scheme in which an investment is done regularly during the employment period of an employee to receive a regular amount of Income after the retirement.
(2)Eligibility : Employees from public, private and unorganized sectors except those from armed forces, can open an account under this scheme.
(3)Investment in NPS is eligible for deduction u/s 80C of Income Tax Act 1961.
(4)Offers a good return over other schemes like PPF and so far has delivered 8% to 10% and hence a low risk investment option.
(5)You can withdraw a certain amount of corpus, from the rest amount you will receive a monthly pension.
(6)Managed by PFRDA - Pension Fund Regulatory and Development Authority.
(7)It is now possible to open an NPS account online, if you link your account to your PAN, Aadhaar and mobile number. You can validate the registration using the OTP sent to your mobile. This will generate a PRAN (Permanent Retirement Account Number), which you can use for NPS login.
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(1)NPS is basically a scheme in which an investment is done regularly during the employment period of an employee to receive a regular amount of Income after the retirement.
(2)Eligibility : Employees from public, private and unorganized sectors except those from armed forces, can open an account under this scheme.
(3)Investment in NPS is eligible for deduction u/s 80C of Income Tax Act 1961.
(4)Offers a good return over other schemes like PPF and so far has delivered 8% to 10% and hence a low risk investment option.
(5)You can withdraw a certain amount of corpus, from the rest amount you will receive a monthly pension.
(6)Managed by PFRDA - Pension Fund Regulatory and Development Authority.
(7)It is now possible to open an NPS account online, if you link your account to your PAN, Aadhaar and mobile number. You can validate the registration using the OTP sent to your mobile. This will generate a PRAN (Permanent Retirement Account Number), which you can use for NPS login.
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