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Tag: Investment

  • Cryptocurrencies Vs Stock Vs Share : Future

    Cryptocurrencies Vs Stock Vs Share : Future

    Digital currency or cryptocurrency – Oh god the internet search trend is booming for this term day by day . But there is a recent fluctuations in the Crypto market which makes the Crypto investors to dig deep about Crypto alternative investment . So here we will make a cross comparison between Cryptocurrencies Vs Stock Vs Share

    You must have heard about Bitcoin. It is not an actual coin made of gold,but it is a digital currency and all of the digital currencies exist on Internet, i.e. electronically.

    There is no state or central government governing this bitcoin. Neither it is authorized by anyone nor a regulatory body maintains it.

    It is a digital currency that means it only exists electronically. Such kind of currency is called cryptocurrency and the way people mine that is called cryptography. This is a kind of investment like the equity market.

    But if Cryptocurrencies Vs Stock Vs Share are to be compared, cryptocurrency has just come into boom so people still chose to invest in equity when it comes to Cryptocurrencies Vs Stock Vs Share.

    Read Also : Bitcoin Vs Other Investments (Gold / Bonds / Stock & Shares)

    Trending Cryptocurrencies

    Bitcoin has been into news for a long time now. But not everyone is buying it since it comes across to be the most expensive coin. There have also been words in the air of bitcoin being a bubble. Apart from bitcoin, there are other digital currencies which seem to be pocket friendly.

    The top 2 picks other than Bitcoin would be:

    ⦁    Ethereum

    While both of Ethereum and bitcoin are powered by a technology called Blockchain. Blockchain is like an online ledger that records every single transaction made. since cryptocurrency has no real physical existence, blockchain allows money to be tracked all over the web so it can’t be copied or counterfeited. Ether’s blockchain is called Ethereum and unlike Bitcoin’s blockchain it features a key technology known as ‘Smart Contract’. It not only transacts transactions, but programs them.

    So Ethereum is stronger and quite more lucrative technology.

    ⦁    Ripple

    The reason why ripple would grow is because it makes it possible for transactions between banks. Ripple would make it easy to make transactions since it is centralized.

    While it literally takes 3-4 days for transactions to be completed, ripple would make it possible in 3-4 seconds.

    Read Also : Top Cryptocurrencies for Promising Investment Returns

    Pros and Cons of Investing in Cryptocurrencies

    There might be the case that people won’t be relating much to cryptocurrency when it comes to Cryptocurrencies Vs Stock Vs Share but there is sure a lot of advantages of these digital coins over the stock market for any investment banker or commoner comparing Cryptocurrencies Vs Stock Vs Share.

    Let’s discuss why is it in the lead:

    Pros-

    1. Mutual exposure
    2. International Use
    3. Customer Anonymity
    4. No surprise fees or waiting period
    5. Improving reputation
    6. Transparent payments with no extra merchant charges
    7. Users can protect money with backup and encryption

    Let’s talk about some downsides now:

    Cons-

    1. Lack of acceptance
    2. List of investors still need to grow to benefit from network
    3. Consumer base
    4. Merchants and startups

    But it still has value because they can be traded in exchange of money just like stocks and bonds . Like money it also has durability, fundability, scarcity, recognisability.

    Read Also : Mutual Fund A Complete Guideline – All You should Know

    Cryptocurrencies Vs Stock Vs Share

    Coming to compare Cryptocurrencies Vs Stock Vs Share, there are a lot of difference, each has pros and cons of itself.

    So, the differences in the crypto realm is that you don’t have intermediaries on your behalf and then engaging with an exchange. we have a broker if are trading forex or equity, you have some person who invests your money and the person is chargeable too.

    On the other hand, again talking of Cryptocurrencies Vs Stock Vs Share, when we are investing in the cryptocurrency, you need not to pay any extra charges in any transactions or converting it to money since you were the sole investor and nobody else had a hand in it.

    Also, raising one more point against Cryptocurrencies Vs Stock Vs Share, when you invest in a digital currency you are anonymous to everyone, any activity cannot be traced back to you while in the equity or forex market this is not the case.

    Read Also :  Forex trading beginner’s Guide to Earn without Loss in Forex

    Is Cryptocurrency Legal

    People are still unsure of bitcoins or any other digital currency as an investment option among Cryptocurrencies Vs Stock Vs Share is because the most common question asked i.e. is trading bitcoin legal? Does one need to get registered for it?

    The bottom line to all of these questions is trading bitcoin is totally legal and is not illegal. Nothing more than selling pens and paper, bitcoin is considered as a personal property and one has an institutional right to sell personal property.

    So cryptocurrency trading is legal in most of the countries but some countries are banning cryptocurrency . May be you should cross check whether cryptocurrency is legal in your country.

    Read Also : Short term Investment Plans – Pros & Cons

    Can you evade tax on Cryptocurrency

    Cryptocurrencies such as bitcoins currently fall outside of the current regulations. It doesn’t mean that they are illegal, it just means they are unregulated and therefore outside of definition of currency, capital and assets and therefore outside of the law that governs them.

    Since the value of bitcoin is not recognized by the government but only the users, in this regard it can be viewed as a commodity that has been given an arbitrary value by those who deal with it. Taxation of bitcoin therefore depends on this very classification. The CBOT has not issued any guidance from taxation perspective on it. But tax authorities in many countries such as UK, US and Australia treat bitcoins as capital assets in hands of investors with the sale resulting in the capital gain.

    Talking of tax evading on cryptocurrency  , there is no such bank which keeps bitcoin so there is no written record of which person would be having what number of coins, till then the person is anonymous to government since the purchase of bitcoin cannot be traced back.

    Now if one is getting it converted into cash and a record is getting maintained for it, then he would have to pay tax over it, since now it is written and recorded and government has the proof. However, if one wants to avoid paying cash on it, they must exchange the coins in exchange of some commodity or asset such as a piece of land or gold. In short, if your spending isn’t getting recorded you don’t have to pay tax over it.

    Read Also : Exclusive Nest Egg building guide for painless millionaire dreamer

    Read Also : Online trading beginner’s guide to online investment

    Future of Cryptocurrency Predicted

    The future of Cryptocurrencies seems so brought from the Cryptocurrency founders viewpoints but the present fall and rise is creating a confusion .

    Future of Investment: Cryptocurrencies Vs Stock Vs Share

    For someone to invest long term among Cryptocurrencies Vs Stock Vs Share, he has to learn to trade in equity market to finally be a pro at it and not face any loss. Investing in cryptocurrecy doesn’t include any middlemen, thus no brokerage charge as opposite to forex/equity market.

    So hope this has given an insight on Cryptocurrencies Vs Stock Vs Share investments which would help you to take better investment decisions .

  • Exclusive Nest Egg building guide for painless millionaire dreamer

    Exclusive Nest Egg building guide for painless millionaire dreamer

    A nest egg can be a big help to you in an emergency. A nest egg is a colloquial term for savings, either in the form of cash or as assets than can be converted to cash, such as retirement plans, savings accounts  or mutual funds. This may be money saved for retirement, but it can also be a source of emergency funds, a down payment for a home or a way to pay for a dream vacation. So here is your Exclusive Nest Egg building guide .

    Exclusive Nest Egg building guide for painless millionaire dreamers

    Some people find it difficult to build a nest egg ,no matter what its purpose . But with a bit of persistence and some creative thinking you can make your money grow. If you’re looking at making investments such as stocks and bonds, it’s a good idea to consult an expert before spending any money.Here is the Exclusive Nest Egg building tips for all the millionaire dreamers.

    Stocks

    If you purchase stocks, look for stable companies whose stocks offer the promise of solid returns. Stocks generally do well over the long term, but may let you down if you can’t afford to wait for the market to recover from the inevitable drops that occur from time to time.

    Read Also : Investment on Stocks and Shares -Pros and Cons

    BondsBonds, especially Treasury bonds, are historically stable, but the interest they earn often doesn’t outpace inflation. In spite of that, buying bonds can be one way to make sure your nest egg has a solid foundation and doesn’t lose value over time. It is one of the Exclusive Nest Egg building way .

    Diversify

    A well-diversified portfolio,one that includes a mixture of stocks, bonds and other investment vehicles that minimizes your overall risk because when one investment loses value another gains.

    401(k)

    Establishing a 401(k) at work can help you build a nest egg. Money may be withheld from your pay and diverted directly into a 401(k). Contribute the maximum allowable amount to build your nest egg quickly. Your company’s matching contributions — “free money” — will boost the speed with which you grow your retirement savings.

    Tax Refund

    Putting your tax refund directly into savings instead of spending it can give a big boost to your nest egg each year. You can also put the money into an IRA account, which will help it grow even more.

    Read Also : Tax clearance in Malaysia – A detailed overview of Malaysian Tax

    Cut Back

    Look for ways to cut spending, and then add the money you would have spent to your nest egg. You might accomplish this by stopping smoking, or cutting your smoking in half, and adding the cost of the cigarettes you didn’t smoke to your fund. Eat out less often and put the money saved in your nest egg instead. While each contribution might not seem like much, over a period of years you can add thousands to your nest egg.

    Bank the Extras

    If you get paid every week, or every other week, chances are that you base your spending and your bill paying on two or four checks per month. During those months where you get an “extra” check, add it to your nest egg instead of spending it.

    Read Also : Mutual Fund A Complete Guideline – All You should Know

    Little Things

    Set up a change jar, and drop all of your change in it every night, but give it a twist and also add at least one bill every day. You can boost this even more by adding all of your single dollar bills every day. If you never leave home carrying ones, don’t spend ones during the day except for tips, and put all of your singles into the jar every night, you can easily add $600 to $1,000 or more to your nest egg every year.

    Pay Yourself

    Pay off a recurring bill, such as one or more of your credit cards or your car. The month following the payoff, continue paying the same amount, but instead of sending it to a creditor use it to pay yourself. Deposit the amount of the payment you have been making in an individual retirement account, a savings account or another nest egg account.

    Leave the Car

    Instead of driving your car everywhere, find ways to leave your car at home. Carpool, take the bus or ride your bike. Take the money you would have spent on gas every week and add it to your nest egg. If you have a long commute, this can add up quickly, but even for short drives this can save you a lot of money over time.It is not just an Exclusive Nest Egg building way but a great deal to save energy.

    Well this is going to be your Exclusive Nest Egg building guide for all millionaire dreams.

     

     

     

     

  • Exclusive 1st home buyers checklist – Must read

    Exclusive 1st home buyers checklist – Must read

    Buying a new home is always wonderful but when it comes to buying a home for the first time , then it is very special . Moreover its not an easy task when it comes to look into all the criteria for buying brand new home for the very first time. So here is our exclusive 1st home buyers checklist to help you take easy and clear decisions.

    Exclusive 1st home buyers checklist – Must read

    Here we will give you point by point first home purchase checklist and the section will be detailed by highlighting the important checklists.

    1. Location to Buy the first home
    2. Right time to buy
    3. Type of the dream home in your mind
    4. Consider what factors matters you
    5. Check your cash reserve on hand
    6. Think about the source of down payment
    7. Check your credit score and loan eligibility
    8. Type of mortgage you need and time to get it sanctioned
    9. Calculate your bills to afford a new home
    10. Prepare list of your new home expenses
    11. Calculate your insurance cost
    12. Source to pay when any ill luck occurs
    13. Get an idea about your long term expenses
    14. Resale value in future
    15. Good real estate agent

    These are some of the most important 1st home buyers checklist.Now lets see all in a brief .

    Location – Where you want to live ?

    You should consider whether you want to live by considering the facts like your easy access to job place , facilities that you need utmost etc. When considering where you want to live you should look about whether you want to be in a busy life city or a serene place in outskirts.Also knowing the neighbours also falls as a great matter when buying home.

    Time – Right time to buy

    Think about the future when you’re ready to buy a new home . You should know the right time on which you will have the capacity to afford a new home with the existing bills in your life. Buying your first home requires adequate thought about your potential future living needs rather than just your current wish list. With a little planning, you can purchase the right home for your current needs, potential life changes and a house that will be easier to sell when you’re ready to upgrade.

    Type -What’s the dream home in your mind

    First home buyers will be having the best dream about their home. Mostly due to budget constraints making the exact blueprint of the dream house is not always possible. But definitely you should know the basic like what type of house you long for , what style of architecture , contemporary or traditional . All these you should think about and have a better idea on this.

    Configuration -Consider what factors matters you

    A key consideration for your first home is the number of bedrooms and baths you want to fit your lifestyle. This is a must first time home buying checklist . If you want a guest bedroom, an office and workout room, you’ll either need a four-bedroom house or one with three bedrooms and a bonus room, attic or basement you can make over. If you don’t mind going up and down stairs every day, a split-level house is fine. Ranches usually provide less square footage, but they let you live on one floor.

    Initial Source – Check your cash reserve on hand

    When it comes to buying anything certainly its a matter of money . So when buying a new home the most important thing you have to do is to calculate the cash you have by hand . This is advised because the process of mortgage loans will take time to get sanctioned but you can’t postpone your down payment till you get loan . Also usually even if you are getting mortgage loans hold 25% of money as cash on hand . Don’t put all this on down payment make sure you keep a good portion for meeting the sudden unexpected bills.This is a must 1st home buyers checklist.

    Down payment – Think about the source of down payment

    Even if you have not made ample saving on hand then you should think about the available sources of down payment options before you. Usually in the case of buying a home there the down payment is the very minimum 5 % to 25 % .When thinking about down payment the major source can be any of the assets which you can pledge or any bonds that can be liquidated, also any source of assistance that can be managed from friends or family , Check with your city about DPA (Down payment assistance) schemes there. Also talk with your Human resource section at your company and inquire the options and scope there.

    Credit score – Check your credit score and loan eligibility

    Loan eligibility is based on your credit score . You must have a valid credit score to get quick loans.One among the most important and unavoidable 1st home buyers checklist.

    Credit score >750  –Excellent
    700-749               –Good
    650-699               –Fair
    550-649               –Poor
    <550                    – Bad

    This is a short overview of CIBIL score . For home loans sanctioning always a credit score of minimum 700 is must .

    Read Also : Improve Credit Score For Getting Loan Approval – CIBIL Score Detailed

    Mortgage Type – Type of mortgage you need and time to get it sanctioned

    Choose the ideal type of mortgage for buying your new home.So for your understanding just briefing the three options of mortgage loan for home buyers ,as we can’t describe the entire details here giving a short update about that –

    Option 1 –

    Fixed Rate or Adjustable Rate mortgage loan you need , so you will be wondering what these two are and which is going to suit you. Here i explain it in nutshell for your convenience . If you are a monthly salaried person who leads life by fixed monthly expense calculation then you should choose Fixed Rate Mortgage loan . This is because the EMI of your loan will remain same even in long tenure with fixed rate of interest . But when you take ARM loan then the interest rate will be low for first few years but it will keep changing as the interest rate is floating . Business people can take ARM loan as they usually look for short term loans and they don’t mind the floating rates of EMI.

    Option 2 –

    Conventional Home loans or Government-insured home loans , this is the next option in deciding the type of mortgage you need for buying first home . Conventional loans are not insured loans while government insured home loans are accepted by federal government with insurance.

    Read Also : Quickly increase credit score in just 12 months -Easiest hack

    Option 3 –

    Jumbo or conforming loans which is the third type of mortgage home loan option.If you look for a jumbo loan then your credit score should be fairly high as the lender is providing loan on high risk so the document process and time of sanction will not be liberal as in the case of the conforming loans.

    Calculate your bills to afford a new home

    The first step in buying your first home is to determine how much house you can afford. Working with a qualified mortgage broker or lender, you’ll easily be able to determine what you can afford based on your current income. A typical guideline recommended by many lenders is that no more than 28 percent of your gross income should go to your monthly mortgage payments and no more than 36 percent of your monthly gross income should go to all debt. So if you’re currently paying 12 percent of your monthly gross to pay credit card, auto or student loan debt, that would leave you with 24 percent of your take-home pay as your mortgage guide. Depending on your lender, you might need to put down 20 percent of the sale price of the home as the down payment along with several thousand more in closing costs. Check your credit reports and scores several months before you think you’ll be applying for a mortgage to see if you need to correct any errors on your report or take any steps to raise your score. This is an important 1st home buyers checklist.

    Prepare list of your new home expenses

    Your first home doesn’t have to be perfect, especially if you’re on a budget. If you don’t mind doing small projects such as repainting walls, refacing cabinets or putting in new carpet, you might be able to get more house for your money. Even if you’re not a DIY expert, many upgrades aren’t going to cost thousands of dollars, and you can make them a year or more down the road. Also a new home will rise new expenses like furniture , new utensils etc.One of the mandatory 1st home buyers checklist.

    Insurance -Calculate your insurance cost

    Your first home insurance should be taken with lot care and understanding the policy in the depth .Understand clearly what exactly your policy will cover and valuate its premium with more than 3 companies at least. You can escrow the insurance payment with your mortgage loan payments.This is considered to be an ideal way when choosing your first home insurance.

    Source to pay when any ill luck occurs

    Everything in life , including this life is not with a guarantee of what would happen tomorrow.So considering a future plan which will provide a revenue source to your family like any early retirement plans as well a healthy insurance plan that meets all your future financial expense that can’t be prevented in future . A happy home should be less stressed , so do anything that can curtail the anxiety caused due to fear of future.

    Get an idea about your long term expenses

    Expansion is the identity of future. So except that everything will command a high cost , so think about the long term expenses. Like if your children are so young when you are buying home then the expenses for them , aged parents etc can be unavoidable future expense. Why it is necessary to think about this point at the beginning stage is because in the long run , the savings will more gone in the form of mortgage loans.I don’t say that you should buy your first home only by meeting this as an important checklist, but it can assure you a more relaxed future.This is not a mandatory 1st home buyers checklist.

    Read Also : Short term Investment Plans – Pros & Cons

    Realtor

    If you have no real estate experience, it’s a good idea to hire a realtor to help guide you through the process and find the right home for you. An experienced realtor can give you a rough estimate of how much house you can afford, what features will cost you more or not affect your budget and which neighborhoods will best suit your needs. Realtors can pull reports on comparable properties in a neighborhood to see if a house you’re considering is overpriced or not, and they can find other information about prospective homes, including past sale prices.

     Resale

    Think of how long you might be in your home and think about how easy any house you’re checking out will be to resell. A standard configuration for most homes is three bedrooms and two baths, which is the most desirable layout for families. Look at the prices of other houses in the neighborhood with the same layout and determine if yours is in the same price range. Comparable homes are used by real estate agents and buyers to value many homes.

    So we have seen many of the factors that is to be looked upon by a first home buyer. Don’t take that you should meet all the listed elements in 1st home buyers checklist. But try to ensure you are meeting the basic and most important elements in the list.

  • Short term Investment Plans – Pros & Cons

    Short term Investment Plans – Pros & Cons

    The frenzy to accumulate as much as possible starts from ants and ends with humans. We live a life building ground for our next step. Finance planning has taken major portion of your brain’s activity, not to mention the stress lines on your forehead and premature grey along your hairline. There are two types of Investment -Short term and long term. Standing at the fork of these roads, we ponder over the lengthy mundane policy guidelines looking for a helpline, a simple sentence which conveys a simpler idea for smart and safe investment.To do a smart investment here we discuss on the Pros and cons of Short term Investment Plans.

    Smart financing is trending, and lack of patience and trust drives people to save somewhere safe and solid. Savings are done by investing your cash in some form that would yield returns/additional benefits- monetary or otherwise. There are different forms of investments, but the ones that all of us are clearly interested and working towards is how to reap what you sow in very less time. It means everyone is interested in short term investment plans.

    What is Short term investment Plans?

    In a not so professional-banker-style, it is to simply put away your resources or assets, which we will very cleverly refer to as capital ,to good use (by not spending it), for a span of few years (typically 1-3 years or less, in fact, it starts from 3 months onwards). It is not an investment until you get back more than what you have put in. So, that sums up our definition for a short term investment. Preserving your assets to ensure its safety and gain additional benefits on return.

    Still if it is not clear here it is in most simple words. Here is a more polished short investment definition .

    short-term-investment-plans

    Short Term Investments as the name itself will define it that it is short term ie) mostly investments made for short period of time. It is part of certain account of the present assets of some company’s current balance sheet usually.Short term investment plans are made for avoiding risk in the capital and it is mostly aimed to get converted to cash within an year.

    • It meets 2 requirements where first and foremost thing the asset which we have kept as short term investment should be easily convertible to cash .

    Example:  Stock price of a company will be attracted by investors to have a share of it.

    • Second requirement is that asset should be easily sold or convert to cash within a period of 3 to 12 months.

    What makes short term investment plans so attractive?

    Primarily, I would say, Need. The necessity to use the money in near future drives this kind of investment. Why is it so desirable?

    • The benefits of short term investment plans are that, firstly, you can break open your piggy bank sooner than later. The tenure for which the investment is made is short, ensuring low risk and faster access to your assets.benefits-of-short-term-investment
    • Secondly, the possibility of losing your investment is low. Short term investments generally are low risk investments given the time period and security (most of the available schemes). The idea behind investments of these kinds are to retain your assets more than multiply.­­

    Top Short Term Investment Plans

    So given that there are lots of investment schemes available, how do we choose the best? And what are the available choices. Here is the list of best short term investments with their pros and cons involved in each of them.

    Fixed Deposit

    If you have a problem with withholding cash and you want to get away from it without getting rid of it, fixed deposit is one such good short term investment plans.

    • A guaranteed investment :

    No risk involved. The return of your investment is certain.

    • No temptation:

    Idea of fixed deposit is to keep funds from being used for a stipulated period. Most banks do not encourage premature withdrawal (usually charged with a fee). This ensures the safety of the investment from self’s squanders.

    fixed-deposits

    • Flexibility of schemes:

    Money can be invested from 1 month or for 5 years depending on the investor’s convenience.

    • Fixed rate of interest:

    Fixed deposit ensures your cash remains safe but what it does not offer is

    • Higher returns :

    The returns at the end of tenure may/may not be higher than that of a savings account but it is not significantly high.

    • Low risk:

    May not be as fruitful as perhaps an investment in stock market or gold.

    • Not much of a tax benefit.

    So fixed deposit is a guaranteed Short term Investment Plans .

    Short term debt funds

     These schemes are basically mutual funds similar to FD in terms of the interest. MIP (monthly income plan), liquid funds, stocks and shares all come under debt funds.

    The advantage of short term debt funds over FD is tax benefits. This means the returns at the end of your stipulated period is more than what you receive from an FD.

    Gold Investment

    A typical investment in India where purchasing gold is considered a status quo and an investment. The idea behind assets in form of Gold is because of its high value in times of need. Considered to have highest resale value and continuous increase in price, this is one of the most preferred form of investment.

    Read Also : Gold purity and hallmark -Buyer’s Guide to choose the Pure Gold Jewellery

    Having said that, ornamental gold is not as much an investment as one expects.

    gold-investment

    • Taxes and Taxes:

    On purchase, additional bracket in your bill comprises of VAT, wastage, sales tax, making charges, which amount to a significant sum in the total bill. This is not considered during an exchange/resell. That is, the value of your gold is minus the amount you spent on previously mentioned categories.

    • Good for only updating to latest designs:

    The value of resale gold is not entirely taken. There is a 6-7% decline in the rate of resale gold and cashing it instead of exchange further reduces its value to about 10%

    • Storage:

    Physical storage of gold is not possible due to fear of burglary. In case these are preserved in bank lockers, a stipulated amount goes into maintaining them.

    • Wastage & Impurity:

    Extensive design requires extensive impurity. Mixing of other metals with gold for tensile strength is not an uncommon knowledge but the impurity matters when it is tested for sale. The amount of gold wasted (gold dust) for making these intricate designs are unaccounted for yet paid for. So end up paying for Gold more than it is worth.

    • Tax reduction:

    Investment in gold does not waiver your taxes as compared to other investment schemes that influence/reduce your Taxes. Lesser ITR, I say!

    • Unpredictable:

    The demand in gold has taken a massive dip many a times in past few years. This can happen in the future too. Unless you are buying gold, such conditions may not be favorable if you are trying to sell them.

    But, as mentioned, in case of dire needs, Gold can always be sold, mortgaged or exchanged at any point of time, making it a suitable investment.

    Savings Account

    Yet another common form of investment is savings account. The idea is simple and safe, every drop makes an ocean; a very famous dialog in our household every time I splurge on something.

    • Readymade withdrawal (ATM) and deposit of cash.
    • Account book becomes an additional identity proof
    • Quick transfer of money to other account.
    • Internet transactions.
    • Benefits on reaching prescribed goals set by particular bank.

    But what you may not get on a savings account is listed as follows.

    • Low interest rates:

    The growth of your investment is almost negligible.

    Each bank has a limit on the amount of customer’s deposit. If your savings exceed their limit, their insurance may not cover the rest of the amount.

    • And yes, the most obvious reason being, you will want to spend them. Given the easy access, it won’t be a tough job to do either.
    • Some banks have minimum balance maintenance. If the deposit/investment falls below their threshold, penalties are charged against the account holder, usually a certain amount.

     Recurring Deposit

    If you want to make a monthly saving but with better interest rates, recurring deposit is one of the ideal schemes available.

    • Deposit amount starts from as low as 500 upward
    • Fixed monthly investments.
    • Flexible duration: from 7 days to years as desired.
    • It has fixed rate of interest which is slightly better than savings account.

    Recurring deposits means periodic deposits. What may pose as constraints in recurring deposit are:

    • Punctual deposition: Money has to be deposited to your recurring account on time without fail, defaulting can cause penalty
    • Premature withdrawals are possible but some banks charge a fee.
    • No tax benefit.
    • Once fixed on the deposit money, it cannot be changed.
    • Low interest rates.

    Monthly Income Schemes

    Again counted to be a secured form of investing your assets for a short (optional) period. Monthly incomes schemes are offered by banks as well as post offices. MIS in post office is preferred over banks because of the following advantages:

    • Interest rate is good compared to fixed, recurring or saving account. Typically it is 8.5%.
    • Maturity period is for 5 years. So your investment stays safe for the period of time, growing.
    • A pre-closure facility is available after a year of opening the account but before 3 years.
    • It provides a monthly interest that can be credited to your account.
    • This interest in turn can be used as a source for recurring deposit or used for daily purpose.
    • These deposits are exempt from wealth tax.
    • The MIS can be opened by a single individual or 2-3 people together or for a minor through a guardian.

    All this makes it ideal short term investment plans for many .

    Given the interest rates are higher compared to other kind of deposits we have discussed so far, these deposits also come with some common limitations like

    • No tax benefit
    • Deduction of 1% if the account is closed prematurely after 3 years.
    • Limit in investment- 4.5 lakhs per individual and 9 lakhs for joint account.
    • Non-Indian resident is not allowed this investment scheme.
    • Minors have a deposit limit of only 3 lakhs

    The MIS schemes offered by banks and private financiers have longer maturity periods and is more a question of security of your investment.

    Recurring Deposit

    PPF is another vital short term investment diligently followed by the working class people. The benefits reaped from PPF are as follows:

    • No eligibility for opening the account. Opening a Public Provident Fund is a simple process and there are pre-requisites to be met for the same.
    • The savings cannot be withdrawn and has specific time period for which it has to be maintained- ensures the investment remains unspent.recurring-deposit
    • Good rate of interest. An interest rate of 8.7% is applicable per annum on PPF.
    • Tax exemption. This is one of the major reasons why PPF is more popular investment option. The annual investment to PPF and the interest earned out of are all exempted from your income tax.
    • Any amount can be deposited to your account. There is no fixed amount.
    • A loan or pre mature withdrawal from your PPF is possible.
    • It is also exempted from debt, liability and wealth tax.
    • A sure form of investment, the amount deposited remains safe.
    • This account, like MIS, can be opened for minors too.

    If you look for tax exemption on investment then this is the best Short term Investment Plans for those who want tax exemption.

    Though the benefits reaped are high, PPF investments come with clauses like –

    • Money cannot be withdrawn from the account until 7th year of opening your PPF account.
    • Joint accounts are not possible.
    • NRI (Nonresident of India) cannot have a PPF account.
    • Maximum investment cannot exceed 1.5 lakhs.
    • Investments can be made only 12 times in a fiscal year, much like a recurring account.
    • Most companies (public and private sector) make mandatory providential fund savings, which is no different from PPF. They even have a VPF (voluntary providential fund) open for employees who wish to make additional contribution to their savings.

    These are not just some of the short term investment schemes available but also most preferred ones in India. The goal behind a short term investment is to save the capital rather than multiply it. More than looking at the cons of a scheme, the nature of the scheme that would suit one’s needs should be analyzed. Read through the policy and guidelines, analyze different schemes available and the benefits, opt the one that suits the best.

    Draw a financial roadmap

    Form an idea as to how to much to invest, and for how long to invest. Consider your immediate and future needs and decide on the term of investment and then pick your ideal Short term Investment Plans.

    financial-roadmap

    Read through current affairs: Be aware of the shift in market, in terms of value of gold, stocks and shares, their growth.

    Analyze Risk: How much to invest is the question.

    From the different schemes available, consider the amount of money you are ready to invest and the kind of investment you are ready make based on the risk involved and the returns.

    Cash at hand: Always make a plan B. No matter how low risk it is, having a backup is good as far as money is concerned. Invest your money in different schemes and ensure there is always some emergency funds at hand for unpredictable circumstances.

    Financial Advisor : They can do the ground work for you and help you make a smart investment. Their insights on not just investment, but taxation and tax efficiency helps make a better financial plan.

    Now let us understand the short term investment plans with their risk level , here is the investment risk level analysis chart –

    Chart explaining the risk level of different types of short term investments with tenure of investment
    Investment type and risk level chart

    Having read the whole article, do not make a decision. Instead, collect the knowledge acquired and talk to a financial advisor. They do not have a degree in finance for no reason.End of the day, ensure you do not get into any shady business, caught up in the need for investment.So go through it well and find your best Short term Investment Plans.