Make sure you invest in financial instruments, whose returns beat inflation. Inflation is quite high and if the returns from your investments are not good, (Fail to beat inflation), the real returns are 0. Do you want zero returns from your investment?
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The consumer-level real inflation in India is growing by 7-8% on an average. Therefore, to earn real returns and beat inflation, you can consider the following investment avenues which are capable of giving you more than 8% return:
Banks will deduct TDS on FD interest income at 10%, if it exceeds Rs 10,000 in a financial year. If you don’t submit the PAN details, its 20%. This income is added to your total income and taxed at income tax slab rates, which are applicable to you.
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Company deposits are unsecured. So, it is good to confirm if they are secured before investing. Also, you may not have any lien on asset of the company in case of default. So, run a background check of the company before you decide to deposit your hard earned money and check the rating of the Company before you invest.
Although NCDs are traded on stock exchanges, they are not liquid. Hence, you may have to sell your NCDs at a discount in times of financial emergencies.
Be informed that the returns on equity and equity-oriented mutual funds are taxed as long-term capital gains. If you are new to mutual funds, investing in large-cap equity funds are a good thing, as the market will be volatile over the next months.
Keep in mind that you will have to use at least 40% of the corpus to purchase an annuity. This ensures that you get a monthly pension after retirement. You can withdraw the remaining balance as a lump-sum. If the accumulated corpus at the time of exit is Rs 2 Lakhs or less, you may withdraw the entire corpus as a lump sum.
Invest in those avenues which are capable of giving you post-tax returns that actually beat inflation. Also, have your investment mix designed in such a way that the investment products, match your risk appetite.
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