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2012年9月13日 星期四

Certificates of Deposit (CDs) - How Do They Compare to Other Investments?


CDs have good potential, IRA or 401k plans have better opportunities, but there is one investment that far out-weighs them all. After reading this article, you should have some understanding of the benefits each of these plans provide, and why CDs-though a solid investment strategy-could be the least in potential to all the others available.

As for the 401k options, there are 2 benefits to this plan:

1) You can commit your money to an interest bearing account before the taxes are taken from it. (This is the most beneficial to those who are in a high tax-bracket. But if you are in a low tax-bracket this feature might not be that good of an incentive.)

2) Your company may match your contributions, in most cases, up to 3%.

An IRA is similar to a 401k program except for the fact that your contributions will be after-tax only. And you will receive no company match. These plans are usually for those who do not have a 401k account available.

The benefit to this options is that once you start withdrawing the money when you retire, it is tax free because you already paid it. (If you are in a high tax bracket now, it would probably be better for you to pay the tax when you retire and you are in a lower tax bracket.)

CDs have their value in the security that they provide. But with interest rates as low as they are these days, a CD is just about the same as only not spending your money. Though the interest is better than what you could get with your regular savings account.

The best investment available can be for those who own a home or can buy a home and already have some equity in it. Why this is the best investment is for several reasons.

1) You do not need a large lump-sum of money up front, as you would with a CD to earn a significant amount of interest.

2) It is the only way you can some day-without moving back home with your parents or something similar-have a home to live in without having a mortgage or rent payment.

3) It is the only investment where you can quickly turn a liability into a saving deposit.

4) For those who do not make a large amount of money and do have a 401k plan available, owning a home can probably generate a much better retirement position than your 401k plan.




I hope you find this information helpful.





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2012年6月19日 星期二

FCNR and Other Bank Accounts Open to an NRI


Out of the different account options available to a non resident Indian, Non Resident external is the most sought after account. The reason being, it allows for transfer of profits and returns on your mutual fund, shares and debentures held in Indian companies. It is held on a repatriation basis, so that you can transfer the profits abroad.

NRE savings type offers a higher interest on your money saved in the bank. NRE type enjoys tax exemption on the income gained through savings account. You are allowed to credit your money in any foreign currency such as EUR, JPY, GBP, USD. Take the money abroad whenever you need money. If you have a nominee to the account, your parents or your spouse nominated can access your account in India. Some may offer you a zero balance account while others have a minimum of 10,000 as balance.

Although, Non resident Ordinary bank account allows a non resident Indian to carry out his banking transactions, and to save money, but it is not on a repatriation basis. The returns on investment cannot be taken abroad. You can deposit your rental income and other income earned in India in these accounts.

Foreign Currency Non-Resident (FCNR) allows you to have financial transaction in five different foreign currencies such as Pound Sterling (GBP), U.S. Dollar (USD), Australian Dollar (AUD), Canadian Dollar (CAD) and Euro. These accounts are used to deposit money in term deposits such as a Certificate of Deposit. These are maintained for a period of one to five years, till its period of maturity.

It allows to transfer the principal as well as the interest abroad in any foreign currency you wish to have them transferred.




Kirthy Shetty
NRI Investment
FCNR Deposits





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2012年5月29日 星期二

Certificates of Deposit (CDs) - How Do They Compare to Other Investments?


CDs have good potential, IRA or 401k plans have better opportunities, but there is one investment that far out-weighs them all. After reading this article, you should have some understanding of the benefits each of these plans provide, and why CDs-though a solid investment strategy-could be the least in potential to all the others available.

As for the 401k options, there are 2 benefits to this plan:

1) You can commit your money to an interest bearing account before the taxes are taken from it. (This is the most beneficial to those who are in a high tax-bracket. But if you are in a low tax-bracket this feature might not be that good of an incentive.)

2) Your company may match your contributions, in most cases, up to 3%.

An IRA is similar to a 401k program except for the fact that your contributions will be after-tax only. And you will receive no company match. These plans are usually for those who do not have a 401k account available.

The benefit to this options is that once you start withdrawing the money when you retire, it is tax free because you already paid it. (If you are in a high tax bracket now, it would probably be better for you to pay the tax when you retire and you are in a lower tax bracket.)

CDs have their value in the security that they provide. But with interest rates as low as they are these days, a CD is just about the same as only not spending your money. Though the interest is better than what you could get with your regular savings account.

The best investment available can be for those who own a home or can buy a home and already have some equity in it. Why this is the best investment is for several reasons.

1) You do not need a large lump-sum of money up front, as you would with a CD to earn a significant amount of interest.

2) It is the only way you can some day-without moving back home with your parents or something similar-have a home to live in without having a mortgage or rent payment.

3) It is the only investment where you can quickly turn a liability into a saving deposit.

4) For those who do not make a large amount of money and do have a 401k plan available, owning a home can probably generate a much better retirement position than your 401k plan.




I hope you find this information helpful.





This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

張貼者： 於 下午1:32 0 意見
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2012年1月20日 星期五

Certificates of Deposit (CDs) - How Do They Compare to Other Investments?


CDs have good potential, IRA or 401k plans have better opportunities, but there is one investment that far out-weighs them all. After reading this article, you should have some understanding of the benefits each of these plans provide, and why CDs-though a solid investment strategy-could be the least in potential to all the others available.

As for the 401k options, there are 2 benefits to this plan:

1) You can commit your money to an interest bearing account before the taxes are taken from it. (This is the most beneficial to those who are in a high tax-bracket. But if you are in a low tax-bracket this feature might not be that good of an incentive.)

2) Your company may match your contributions, in most cases, up to 3%.

An IRA is similar to a 401k program except for the fact that your contributions will be after-tax only. And you will receive no company match. These plans are usually for those who do not have a 401k account available.

The benefit to this options is that once you start withdrawing the money when you retire, it is tax free because you already paid it. (If you are in a high tax bracket now, it would probably be better for you to pay the tax when you retire and you are in a lower tax bracket.)

CDs have their value in the security that they provide. But with interest rates as low as they are these days, a CD is just about the same as only not spending your money. Though the interest is better than what you could get with your regular savings account.

The best investment available can be for those who own a home or can buy a home and already have some equity in it. Why this is the best investment is for several reasons.

1) You do not need a large lump-sum of money up front, as you would with a CD to earn a significant amount of interest.

2) It is the only way you can some day-without moving back home with your parents or something similar-have a home to live in without having a mortgage or rent payment.

3) It is the only investment where you can quickly turn a liability into a saving deposit.

4) For those who do not make a large amount of money and do have a 401k plan available, owning a home can probably generate a much better retirement position than your 401k plan.




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Personally, Alfred has worked in the financial field for almost 15 years.





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張貼者： 於 下午3:02 0 意見
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2012年1月12日 星期四

How Do the Investment in Company Deposits Compare With Other Fixed Income Instruments?


A large chunk of Indian investors look out for fixed income saving instruments, which comprise of several products ranging from bank fixed deposits, postal savings, government bonds and public provident fund and income funds or liquid funds schemes of mutual funds, to name the few. Of all the fixed income instruments, bank fixed deposits perhaps account for more than 50% of Indian Savings. During the past one and half year, interest rates on bank fixed deposits (also called as term deposits) have come down drastically. Nowadays, the interest rates on bank term deposits of nationalized banks and major scheduled banks are in the range of 6 to 8% depending upon the tenure and the popular postal savings such as NSC, KVP and PPF offer 8%. It is obvious that the Investors would look out for better alternatives in the Fixed Income Products.

If you are seeking higher returns than bank deposits and postal savings and if you do not want to lock in your funds for longer durations, you might consider investments in company deposits, which offer returns in the range of 9% to 12%. Although the returns on company deposits are much better than any other fixed income instruments but you must understand various aspects such as risk, liquidity, taxation and returns before you make up your mind to invest in company deposits. Here are few salient features of investments in company deposits.

Risk: Company deposit is an unsecured loan for the company, that is, as an investor you do not have any lien on the assets of the company. In case the company is facing financial difficulties or it is likely to become bankrupt, lenders of secured assets would get the first priority and your turn comes only after all the secured loans have been repaid by the company. As compared to company deposit, bank deposit is much safer because the repayment of the deposit up to rs. 100,000 is guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation of India). Safety of your deposit depends upon the overall financial health of the company.

Liquidity: Although the Company Deposits are issued for the tenure ranging from 1 to 5 years but the Company Deposits are neither Listed on the Stock Exchanges nor Transferable. Generally, the conditions for premature withdrawal are not favorable and therefore, Company Deposits may be termed as more illiquid as compared to Mutual Funds and Bank Deposits.

Taxability: Interest Income from Company Fixed Deposits is taxable in the hands of the Investor and the issuing companies are supposed to deduct tax before paying interest to the investors. The interest income has to be shown under the heading "Income from Other Sources" in your Income Tax Return. You must take the decision to invest in the Company Deposits based on the Tax Bracket applicable to you.

Return: Rate of Interest varies with the companies. Many companies offer the deposits with cumulative interest option with monthly, quarterly or yearly cumulative interest in which case the interest earned gets reinvested at the same interest rate and thus resulting in better yields. Options with monthly cumulative interest provide the highest effective yield. At present, the effective yields on deposits of various companies are in the range from 9% to 14%.

How to Invest: Nowadays, many Online Stock Trading Companies and Brokerage Houses such as HDFC Securities, and ICICI Direct offer online and offline investment facility in Company Deposit.

Factors to be kept in mind while investing in Company Deposits

· Know about the financial position of the company:

· Know the Promoters and their track-record.

· Look out for the profit making companies and the ones that regularly pay dividends.

· Check out the ratings given by Credit Rating Agencies such as CRISIL and CARE.

· Keep a watch about any adverse reports or news about the company.

· Ascertain about the servicing standards such as Mode of Interest Payment and Repayment of Principal Amount, and promptness in the issuance of TDS certificates.

· Learn about the penalties and other terms and conditions for premature withdrawal

· Don't park your funds with one Company. Spread the funds and invest in the Companies engaged in different sectors.

· Risk involved in investing with smaller companies is definitely more than the risk of investing with large corporates of the likes Tata Motors, HDFC etc.




The Author is a Techno-Commercial Consultant and Freelance Content Writer.





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