postaday2011 | wealthymatters

Tax – Saving Fixed Deposits

April 4, 2011 4 Comments

In Budget 2006, the government extended tax benefits under section 80C of Income Tax Act, 1961 to five-year tax-saver deposits. As per this provision, a tax-payer is eligible for exemption on five-year deposits on investments up to Rs 1 lakh. These fixed deposits are locked in for a five-year period . There is no option of premature withdrawal. Also, you cannot pledge this type of term deposit as collateral to secure a loan to meet liquidity needs. Similarly, banks do not offer overdraft facility on tax-saver deposits.Unlike the plain vanilla fixed-deposit products, these tax-saver FDs do not have the sweep-in facility. This means a person cannot link fixed deposit to their savings account so that the surplus funds in the savings account can be automatically invested in this fixed deposit.In addition, there is no overdraft facility available on the tax-saver FD. As this instrument of saving money is special due to its tax-saving status, banks do not extend relationship benefits on the tax-saver FD. Read more of this post

Filed under Paper Assets, Tool Kit Tagged with 1 lakh, 80C exemption, FD, Fixed Deposit, Income Tax Act 1961, Interest Rate, postaday2011, RandomBlog2011, Ratekhoj, section 80C, senior citizen rates, Tax Saver Fixed Deposit, tax saving fixed deposit rates

Bank Fixed Deposits

April 4, 2011 4 Comments

A bank FD is a savings instrument where you deposit an amount with the bank for a fixed duration.You earn a fixed rate of interest on this investment. The interest rate is fixed at the time of the investment – even if interest rates change during the tenure of the FD, the interest that you earn on your FD remains fixed. A FD is also called a Term Deposit at times, as it is an investment for a pre-defined term.

All banks have their own rules on minimum deposits.Most nationalized banks will start a FD with just Rs.1000.

The tenure of a FD can be anywhere from 15 days to 10 years.The rate of interest offered on a FD depends on various parameters: the prevailing interest rates, the duration of the FD, the amount of the FD, your age, etc.Usually, the longer the tenure of the FD, the higher is the interest rate.However,when the economy has a liquidity crunch,banks do offer higher rates on short-term deposits too.They also come out with Special Term Deposits of more unusual tenures such as 555 days, 1001 days etc.Most banks offer a different rate of interest on FDs of more than a certain amount, usually Rs. 15 Lakhs.Also, most banks offer an extra 0.5% per annum to Senior Citizens.Some banks also offer different rates for Trusts and Societies. Read more of this post

Filed under Paper Assets Tagged with annualized rate, Bank FDs, Bank Fixed Deposits, breaking a FD, capital safety, Compound Interest, compound interest calculator, cumulative, Deposit Insurance, Deposit Insurance and Credit Guarantee Corporation, DICGE, FDs, fixed deposit certificate, Fixed Deposits, Form !6A, Frequency of Compounding, internet banking, low risk investment, minimum deposits, nationalized banks, one lakh, PAN Card, penalty, postaday2011, RandomBlog2011, rate of interest, savings instrument, Scheduled Bank, Senior Citizen's Term Deposits, short term investment, simple interest, Special Term Deposits, Tax Deduction at Source, TDS, Tenure, Term Deposit

India – World Champs

April 4, 2011 3 Comments

It felt great to watch Team India win the ICC World Cup 2011 under Capt.M.S. Dhoni.

Then I started thinking about the last time we did so in 1983 under Kapil Dev.So many things have changed….. Read more of this post

Filed under Tidbits Tagged with 2011 1983, cricket, Harbajan Singh, ICC World Cup, India, Indians, Kapil Dev, M.S. Dhoni, postaday2011, RandomBlog2011, Sachin Tendulkar, world champions

CIBIL and your CIR

April 3, 2011 8 Comments

Before a bank/other financial institute extends a loan to you,a potential borrower, it needs to take a decision on whether you would be able to repay the interest and principal or default and how much risk is involved in lending money to you.Banks rely on many factors to take this decision on your credit-worthiness – including your income and household income , your other loans and EMIs, your previous repayment history and defaults if any, etc.In the past, the banks had to collect all this information from you before analyzing it. But now, they have a readily available tool to make this decision simpler for them – your credit history in the form of your Credit Information Report (CIR).

In India, the Credit Information Report is created and maintained by a company called Credit Information Bureau (India) Limited, or CIBIL.The Credit Information Report is a compilation of your repayment history.CIBIL was promoted primarily by State bank of India (SBI) and HDFC. Now, most banks, financial institutions, non-banking financial companies, housing finance companies and credit card companies are its members, and regularly provide it with data about borrowers. Read more of this post

Filed under Paper Assets, Tool Kit Tagged with banks, CIBIL, CIBIL Report, CIR, credit history, Credit Information Bureau India Limited, Credit Information Report, credit-card companies, credit-worthiness, default risk, financial institutions, HDFC, Housing Development Finance Company, identity theft, loans, NBFCs, non-banking financial companies, postaday2011, RandomBlog2011, repayment history, SBI, State Bank Of India

The Importance of Having a Contingency Fund

March 30, 2011 3 Comments

This letter was written in 1939,ten years into the Great Depression, by Warren Buffett’s grandfather Ernest, to his youngest son (and Warren Buffett’s uncle) Fred, and his wife. Warren found it in a safe in 1970 while executing a will of a family member…along with $1000. I believe I will gift a copy of this letter and cash for a contingency fund to any children I might have.

Dear Fred & Catherine,

Over a period of a good many years I have known a great many people who at some time or another have suffered in various ways simply because they did not have ready cash. I have known people who have had to sacrifice some of their holdings in order to have money that was necessary to have at that time.

For a good many years your grandfather kept a certain amount of money where he could put his hands on it in very short notice.

For a number of years I have made it a point to keep a reserve, should some occasion come where I would need money quickly, without disturbing the money that I have in my business. There have been a couple of occasions when I found it very convenient to go to this fund. Read more of this post