Tax Finance Info: Investment

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Investment: Tips - Where to Invest Your Surplus Money

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Investment: Tips - Where to Invest Your Surplus Money</h3>
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<img border="0" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsEUIxPhPgp1Vvv3cqTFuGDd6Or6rzRtM3Ld5CCKsyo1FxF4FXzgFnp1j8IrqbH6wmQhvwO-Kj4yOEk-UZiZqh-nBzsv6mLoH3qaYVSRkb_cIWuOjJaqx8z91ja1whcGkwjC6OzPbac3Ic/s1600/Screenshot_3.jpg" width="320" /></div>
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<span lang="EN-US">In easy
language Surplus Money is Your Total Income Less the expenses incurred by you.
The less you spend the money, the more you can save.  You can invest your Money at the following
places:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">      -<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">When you have little
fund:</span></b><span lang="EN-US">
Deposit the part of your savings in bank and try to accumulate it as much as
you can.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">When you have some
Fund:</span></b><span lang="EN-US">
Invest in Securities having nominal charges and very low purchase requirement with
maximum return and reinvestment plans so that you can increase the amount of
your investment.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">When you have some
more Fund:</span></b><span lang="EN-US">
You can go for investing in mutual funds.</span><span lang="EN-US"><o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">When you have more Fund:</span></b><span lang="EN-US"> You can go for
purchasing precious metal like gold, silver, etc. You can also go for down
payment for purchasing some capital asset.<o:p></o:p></span></div>
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<span lang="EN-US"><span style="font-size: large;"><b>If we
consider the time factor you can invest in the following manner:</b></span><o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Short Term
Investment:</span></b><span lang="EN-US">
In case of short term investment shares from open market are the best options.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Medium Term Investment:</span></b><span lang="EN-US"> When you are
planning for a medium term borrowing, you can choose options like mutual funds,
Down payment for purchasing Capital Assets, Purchasing precious metals and
buying some bonds with medium lock-in period.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Long Term Investment:
</span></b><span lang="EN-US">There
is a huge deal in planning for long term investments. There are many options
when you consider the long term investments. They are:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Purchasing Immovable Property<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">Purchasing Government Bonds<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">You can opt for depositing your money in a Fixed Deposit
Account with the bank. This is the safest mode ever.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">You can go for paying a onetime premium for future policies.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt;">  
</span></span><span lang="EN-US">You can also opt for starting a new business by investing
your surplus money.<o:p></o:p></span></div>
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<span style="font-size: large;"><b><span lang="EN-US" style="font-family: Wingdings; mso-bidi-font-family: Wingdings; mso-fareast-font-family: Wingdings;">v<span style="font-family: 'Times New Roman';">  </span></span></b></span><span lang="EN-US"><span style="font-size: large;"><b>Points to be kept in
mind while planning for investment:</b></span><o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Availability of surplus:
</span></b><span lang="EN-US">When
you decide to invest in any security, property, etc you must be firm about the
source of surplus i.e. from where are you going to get the surplus amount for
investment.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Form a strategy about how the investment of your surplus can
help you earn most profit.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Liquidity</span></b><span lang="EN-US">: The most important
point is you must take into consideration the liquidity factor. The cash
required for day to day activities and other emergencies must be kept aside
before making any investment.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US"> Have the necessary
amount of fund to repay the borrowed amount if you have borrowed the fund.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">When you are willing to go for short term investment, choose
the investments which are more liquid in nature.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Risk Management: </span></b><span lang="EN-US">When you go for any
type of investment, first scan the market so that you can learn about the risk
associated with your investment. This will help you to choose investment
bearing least / negligible risk. After investing also keep watch on market
fluctuations so that if your investment are becoming risky, you can switch over
to less risky ones.<b><o:p></o:p></b></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><b><span lang="EN-US">Diversification: </span></b><span lang="EN-US">Don’t invest all your
money in one investment option. Go for diversification. Diversify them by investing
a part of saving in short term, medium term and long term investments. This
will help in maintaining liquidity and earn handsome return on the investment.</span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif;">     </span><span style="font-family: 'Times New Roman', serif;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Also consider the Tax that will be attracted on your
investment income while you invest. This will help you save your tax.</span></div>
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Investment: Tips - Where to Invest Your Surplus Money

Investment: Tips - Where to Invest Your Surplus Money In easy language Surplus Money is Your Total Income Less the expenses incurred...

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Safe Investment Options in India but How safe are these options!

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Safe Investment Options in India but How safe are these options!</h2>
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<span class="yiv2375480635null"><span lang="EN-US">Majority people are
drawn by the attractive schemes of different investment companies. More than 50
% of such people face problems of dissatisfaction from such schemes because the
company may not be trustworthy. So, intelligent people tend to invest in safe
investments. Let us consider the safe and unsafe side of the different
investment options in India.<o:p></o:p></span></span></div>
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<span class="yiv2375480635null"><span lang="EN-US">The safest
investment is considered as investment in fixed deposits with bank. It provides
100 % Safety if it is with a trustworthy bank. This is because the banks are
regulated by the Reserve Bank of India. It provides return on regular basis. It
also helps to save tax. But if we see other side of the coin, it carries the
following risks:<o:p></o:p></span></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";">      -<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">People may have to deposit at very lower rate.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">As the interest on FD is based on the inflation effect, rate
of return may decrease with increasing rate of inflation.<o:p></o:p></span></div>
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<span lang="EN-US">Indian
people are more traditional and give the next priority to gold. They can help
to earn a lot of money by fate but the return is never fixed neither safe. The
unsafe side of such investment is:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Gold is not a useful material it is only a tentative object
on which people invest to make saving.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">The price of gold are never stable they can get to earth at
any time.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">If the price of gold in which we invest does not increase,
we will also lose the opportunity return that we may have earned from other
investment options.<o:p></o:p></span></div>
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<br /></div>
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<span lang="EN-US">Real
estate has also emerged as an investment option but it has same safe and unsafe
side as that of gold. It can never be decided when the value of a plot of land,
house or office will increase or decrease and the worst thing is the intensity
of fluctuation is never known.<o:p></o:p></span></div>
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<br /></div>
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<span lang="EN-US">The
other better options of investments as per public reviews are Government Bonds
and Public provident fund. They are very safe but may seem to be unsafe when in
a case we have to face liquidity issues and can’t withdraw any pie from such
investments. <o:p></o:p></span></div>
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<br /></div>
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<span lang="EN-US">Mutual
Funds are the next prioritized investments. They tend to be very safe. IT is
said that mutual funds are transparent in nature but it is never so. Let us
have a look at its cons:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">Mutual Funds attract a lot of charges in aggregate as all
the transactions are carried out by levying loading charges.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">It may drag you to the high tax bracket even if the actual
income of your does not tend to be in that bracket.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Times New Roman","serif"; mso-fareast-font-family: "Times New Roman";"><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;">     </span><span style="font-family: 'Times New Roman', serif; text-indent: -18pt;"> </span>-<span style="font-family: 'Times New Roman'; font-size: 7pt;">         
</span></span><span lang="EN-US">You will not be able to invest in the securities you find
better as you give the safety of your investments in the hands of the fund
managers of the mutual fund companies.<o:p></o:p></span></div>
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<span lang="EN-US">We
all are very well aware about investment in the equity market. In this people
invest their money in the stocks traded at stock exchange or in any private
way. People try to earn maximum return on such investment and in many cases the
return are satisfactory. They never know how the company will perform or what
will be the result of such investment; even in many cases people may not know
the promoters of the company they are investing their find in. Such investment
is full of risks. Market fluctuation is the most common risk. In many cases the
value of share goes to 0.<o:p></o:p></span></div>
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<span lang="EN-US">There
are many other options of investments but none of them are 100% secure. This is
because the investment companies also want to earn very high profits. This will
hinder the safety of the investors.<o:p></o:p></span></div>
<br /></div>

Safe Investment Options in India but How safe are these options!

Safe Investment Options in India but How safe are these options! Majority people are drawn by the attractive schemes of different i...

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Tax-Free Bonds vs. Bank Fixed Deposits - A Comparison

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Tax-Free Bonds vs. Bank Fixed Deposits - A Comparison</h2>
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<img border="0" height="143" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpDLfw-HPXp-Qdus0PU8x7ewKGbH8n0AJj5BkXSeBUf5we8-_fmb3i8slqS04JG4CKCDqCThTfmuePvWDPQpkcduQ7MBeSEoLfql7DlzFetQqNxf6PvGAJEaICV2U_GufErNSFyUg-Y8al/s1600/Screenshot_3.jpg" width="320" /></div>
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<span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">There are lots of investment
options available in the capital market such as Equity, bonds, Mutual Funds and
much more securities. It is very difficult to choose between the securities as
to which is the best as per the market conditions and other matters affecting
its existence and status in the market.<o:p></o:p></span></div>
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<span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Tax free Bonds and Bank
Fixed Deposit are one of such options for investment of long term. The bonds
are considered as the safest security in the capital market. While FD with bank
is also safe as it is in the hands of the Banks and the Banks are governed by
the RBI so the public interest is never at stake. Let us see which of the two
securities viz. Tax free Bonds and Bank Fixed Deposit acts best for the
investor from different angles by keeping in mind the affecting factors in the
market.<o:p></o:p></span></div>
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<span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">The points of comparison
between Tax free Bonds and Bank Fixed Deposit are as given here under so that
it becomes easy for the investors to choose between Tax free Bonds and Bank
Fixed Deposit:<o:p></o:p></span></div>
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<div class="MsoListParagraphCxSpFirst" style="margin-left: 18.0pt; mso-add-space: auto; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;">
<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Tenure:</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> The Tenure of the Fixed Deposit is generally around 5
to 10 Years while that of the Tax Free Bonds is around 10 to 20 years. Tenure
is the lock in period. Your funds will be locked ill the completion of the
tenure. Thus if we think about the liquidity the Fixed Deposit provides early
liquidity as compared to the tax free bonds. So the people who want to
liquidate their investment in a short tenure, they can opt for the Bank Fixed
Deposit option rather than going for the Tax Free Bonds.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Taxability on Return: </span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">The return on Tax Free Bond
as the name suggests is not chargeable to any tax. But the Fixed Deposit
Interest is taxable as per the applicable tax bracket. This feature provides
attractiveness to the Tax Free Bonds as compared to the Fixed Deposit with
Bank. The interest on Bank Fixed Deposit affects the tax bracket of a person
and may drag him to the higher tax bracket.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Pre Tax Rate of Return:</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> The interest rate of return
before tax is around 7.22 to 7.88% on Tax Free Bonds and around 8.5 to 9 % on
Fixed Deposits. So if there is no tax imposed on the Fixed Deposit Interest, it
is more attractive option as compared to the Tax Free Bonds. <o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Post Tax Rate of Return:</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> Before imposition of tax the
Fixed Deposit is an attractive option but after imposition of tax, the scenario
of attractiveness changes on a large scale. We can see that after the tax is
imposed the interest rates on Tax free Bonds are ultimately higher as it will
remain same but the interest on Fixed Deposit will reduce as follows:<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; line-height: 115%; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   </span></span><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">At 10.30% Tax
Bracket    - 7.71% to 8.16%<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; line-height: 115%; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   </span></span><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">At 20.60% Tax
Bracket    - 7.05% to 7.46%<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "Courier New"; line-height: 115%; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: "Courier New";">o<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">   </span></span><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">At 30.90% Tax
Bracket    - 6.49% to 6.88%<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Liquidity Feature:</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> The Tax free Bonds can be
easily liquidated as compared to the bank Fixed Deposit. The liquidation of
Fixed Deposit before completion of tenure attracts lots of charges and provides
the investor with reduced interest rate. While the Tax Free Bonds can be
liquidated and transferred easily. It also provides the return annually which
will help to maintain certain portion of liquidity indirectly.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">TDS Applicability:</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> As the interest on the Bank
Fixed Deposit is chargeable to tax, the Bank deducts the Tax at Sources before
paying the interest to the investor. While in the case of Tax Free Bonds, the
interest is not at all taxable so the question of deducting tax at source does
not arise at all. When the Interest amount exceeds Rs. 10,000 than the Bank
will deduct tax at source on interest on Fixed Deposits.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Safety: </span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">The Tax Free Bonds are generally issued by the
Government and so they are highly secured and the chances of not getting the
money back are little. While in the case of Bank Fixed Deposit, no matter how
much amount you keep it as Fixed Deposit, in case when the bank does not repay
the amount back on maturity or the bank becomes insolvent, the RBI  pays the amount upto Rs. 1 Lakh if the Fixed
Deposit exceeds Rs. 1 Lakh and if he Fixed Deposit is below Rs. 1 Lakh the
insurance is upto the amount of the Fixed Deposit kept by the investor.
Insurance by RBI in case of Fixed Deposit provides great safety if the Fixed
Deposit is upto the amount of Rs. 1 Lakh but if the investment amount is higher;
the tax free bonds are smarter option as they are secured investment.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Form of Investment: The Tax Free Bonds are available
in both D –</span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;"> Mat and Physical Format. So it becomes easy to keep it in
the D- Mat format for adopting the concept of paperless office. While the Bank
Fixed Deposit is always in the physical form and the option of keeping it in
the Dematerialized format is not available. So the investors have to take care
of the bunch of papers of Fixed Deposit till its maturity.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: Wingdings; line-height: 115%; mso-bidi-font-family: Wingdings; mso-bidi-font-size: 16.0pt; mso-fareast-font-family: Wingdings;">Ø<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;">  </span></span><b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">Compounding of Return: </span></b><span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">The interest on Fixed
Deposit with Banks is compounded for given period of times as per the terms and
conditions of the Fixed Deposit. It provides more return ultimately at the end
of the tenure. While in case of Tax Free Bonds, the interest or return is paid
to the investor every year so no question of compounding of the return on Tax
Free Bonds Rise. It will attract Simple interest on the investment. So if we
consider the method of calculating return, Fixed Deposit is more attractive as
the return on t is compounded as compared to simple interest paid on the Tax
Free Bonds.<o:p></o:p></span></div>
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<span lang="EN-US" style="line-height: 115%; mso-bidi-font-size: 16.0pt;">The above points of
comparison will be of great use for the investors as it shows the right picture
of both the investments. The financial advisors suggests that the Tax Free
Bonds are more smarter option as compared to the Bank Fixed Deposit as the
interest on Tax Free Bonds is Tax Free and it also provides fixed rate of
interest. Also the interest on Tax Free bond is paid to the investor annually
so the same can be re – invested if it is not required for use. The best option
for re- investing the interest of Tax free bond is to deposit it in the
recurring account. As the return on Tax Free Bonds is free of tax it does not
change the tax bracket of the tax payer and it is also of great help for the
investors with higher tax bracket.<o:p></o:p></span></div>
</div>

Tax-Free Bonds vs. Bank Fixed Deposits - A Comparison

Tax-Free Bonds vs. Bank Fixed Deposits - A Comparison There are lots of investment options available in the capital market such as Eq...

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