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Tag: Tax-Saving

  • Maximizing Your Fixed Deposits: How to Choose the Best Rates

    Maximizing Your Fixed Deposits: How to Choose the Best Rates

    Fixed deposits (FDs) have long been a preferred savings option for risk-averse investors looking to secure steady returns. With the promise of guaranteed returns, FDs provide peace of mind and predictability, which is especially valuable during volatile market conditions. However, maximizing the benefits of your fixed deposits requires careful attention to fixed deposit rates. Selecting the right bank or financial institution offering competitive FD rates can significantly impact the maturity amount. Additionally, tools like the FD calculator can help you make more informed decisions. In this article, we’ll explore how to choose the best FD rates and maximise your returns.

    1. Understanding Fixed Deposit Rates

    Fixed deposit rates refer to the interest rate offered by banks or financial institutions on your FD investment. This rate determines how much your investment will grow over a specific tenure. Typically, these rates are fixed for the tenure of the deposit, meaning your returns are locked in, making FDs a stable investment.

    FD rates vary based on factors such as:

    ● The tenure of the deposit (short-term, medium-term, or long-term)   
    ● The financial institution offering the FD   
    ● The investor’s age (senior citizens often receive higher rates)   
    ● Economic conditions and regulatory factors

    Banks and non-banking financial companies (NBFCs) regularly update their fixed deposit rates, often influenced by changes in the Reserve Bank of India (RBI) policies. Understanding the factors affecting these rates will help you choose an option that provides the highest returns for your specific needs.

    2. Factors to Consider When Comparing Fixed Deposit Rates

    When aiming to maximize your returns from fixed deposits, there are several factors to keep in mind beyond just the interest rate:

    a) Tenure of the Deposit

    One of the most critical aspects of selecting an FD is determining the appropriate tenure. Short-term FDs, generally ranging from 7 days to 12 months, may offer lower fixed deposit rates than long-term deposits. Typically, the longer the tenure, the higher the interest rate offered. However, it’s crucial to match the tenure with your financial goals.

    b) Financial Institution

    Different banks and NBFCs offer varying FD rates. While public sector banks often provide safety and reliability, private banks and NBFCs may offer slightly higher interest rates. It’s essential to evaluate the credibility of the institution before investing, as some NBFCs may carry higher risks despite offering attractive rates.

    c) Senior Citizen Benefits

    If you are a senior citizen (aged 60 or above), you may be eligible for preferential rates. Many banks offer an additional 0.5% to 0.75% interest to senior citizens on their FDs. This is a great way for retirees to maximise their income while keeping their investments safe.

    d) Premature Withdrawal Penalties

    While FDs are known for their fixed tenure, emergencies may force you to withdraw your funds before maturity. In such cases, premature withdrawal penalties could reduce your overall returns. Some institutions may offer flexible withdrawal options with lower penalties, so it’s worth considering these factors while choosing your FD.

    e) Interest Compounding Frequency

    The frequency with which interest is compounded (monthly, quarterly, half-yearly, or annually) can impact your total earnings. FDs that compound interest more frequently (e.g., monthly) can help you earn more over time. It is advisable to use an FD calculator to understand the impact of different compounding intervals on your returns.

    3. Using an FD Calculator to Compare Returns

    An FD calculator is an essential tool for anyone looking to invest in fixed deposits. It allows you to calculate the maturity amount based on the interest rate, tenure, and principal amount. By entering these details, you can easily compare different FD schemes and find the one that offers the best returns for your investment.

    a) How to Use an FD Calculator

    Using an FD calculator is simple. You need to input:

    ● The principal amount (the money you wish to deposit)   
    ● The fixed deposit rates offered by the bank or institution   
    ● The tenure (in months or years)   
    ● The interest compounding frequency (monthly, quarterly, annually, etc.)

    The FD calculator will then show you the maturity amount and the interest earned during the tenure. This tool is incredibly helpful in comparing multiple FD options and deciding which one will give you the maximum returns.

    b) Benefits of Using an FD Calculator

    ● Quick Comparison: Instead of manually calculating the returns on different FDs, the calculator instantly provides results, allowing you to compare offers from various banks and NBFCs.   
    ● Precision: By factoring in the compounding frequency, the FD calculator gives accurate results, making it easier to assess which institution offers the best deal.   
    ● Financial Planning: It helps you plan for the future by showing you how much you can expect to receive at the end of your FD term.

    4. Strategies to Maximize Fixed Deposit Returns

    To get the most out of your FD investment, consider the following strategies:

    a) Laddering Your Fixed Deposits

    FD laddering involves splitting your investment into multiple deposits with varying tenures. For instance, instead of investing ₹3,00,000 in a single FD, you could invest ₹1,00,000 each in FDs of one year, two years, and three years. This strategy allows you to benefit from potentially higher fixed deposit rates as they rise over time while maintaining liquidity. As each FD matures, you can reinvest at a better rate if the market conditions are favourable.

    b) Opt for Auto-Renewal

    Many banks offer an auto-renewal option where your FD is automatically renewed at the prevailing interest rates upon maturity. This ensures that your money continues to earn interest without any delay. However, check the rates at the time of renewal, as they may differ from the initial rates.

    c) Invest in Corporate FDs

    While corporate FDs typically carry higher risk than bank FDs, they often offer more attractive fixed deposit rates. Investing in corporate FDs from reputed companies can provide higher returns. It’s essential, however, to assess the company’s credit rating before opting for such an investment.

    d) Tax-Saving Fixed Deposits

    Tax-saving FDs are a great option for individuals looking to save on taxes while earning decent returns. These FDs come with a lock-in period of five years and are eligible for deductions under Section 80C of the Income Tax Act. While the interest earned is taxable, the initial investment amount is deductible, making it a good choice for tax-saving and wealth-building purposes.

    5. Evaluating Risk and Returns

    While FDs are generally considered low-risk investments, it’s still important to evaluate the financial health of the institution where you are investing. Higher fixed deposit rates may be attractive, but they could come with increased risk if the institution is less stable. Credit ratings can provide a useful indicator of the institution’s reliability. Also, ensure that your deposit is insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC), which offers insurance coverage of up to ₹5 lakh per depositor.

    Conclusion

    Maximizing your returns on fixed deposits involves more than simply choosing the highest fixed deposit rates available. Consider factors such as tenure, the financial institution’s credibility, premature withdrawal penalties, and interest compounding frequency. Tools like the FD calculator can help you make informed decisions by comparing different FD options and calculating potential returns. Additionally, employing strategies like FD laddering, opting for tax-saving deposits, or considering corporate FDs can enhance your overall earnings. By taking a comprehensive approach, you can ensure that your fixed deposits work effectively towards achieving your financial goals.   
     

  • How to select the best ELSS funds for tax saving in 2024?

    How to select the best ELSS funds for tax saving in 2024?

    Mutual fund investments are extremely popular in India. Statistics show that mutual fund SIP accounts stood at 7.91 crore until January 2024. However, when investors invest in these flexible schemes, they also look to benefit from a tax-saving perspective. ELSS (Equity Linked Savings Scheme) mutual funds constitute a sub-category of equity funds that helps investors do just that.

    Stepwise plan to help investors select the best ELSS funds in 2024:

    Investors can adopt the following strategic approach to investing in ELSS funds in 2024 to make the most of their mutual fund investments:

    • Listing down investment objectives and carrying out a risk assessment: As the first step, investors must list down their investment objectives. It helps to think of investment objectives in one-line assertions: “I wish to plan my retirement” Or “I wish to save for an upcoming vacation”, for example. Next, the investor must analyse their risk-taking capacity and gauge whether they are a conservative or a non-conservative investor with respect to risk.

    • Shortlisting ELSS funds and analysing them: Next, the investor must research ELSS funds online and analyse them. The most efficient way to analyse an ELSS fund is by using a mutual fund SIP calculator. Investors can use these free, online tools to calculate their returns at the end of their investment tenure. These calculators can also help investors know their ideal investment amount. After shortlisting a few ELSS funds, investors must compare their expected returns to further narrow down their search.

    • Noting down the expenses of investing in each shortlisted ELSS fund: Since ELSS mutual funds charge an expense ratio, investors must also note down the expense ratios charged by each fund in their shortlist. This will help them further narrow down their list and bring it down to two-to-three funds.

    • Considering liquidity concerns: Investors should bear in mind that ELSS mutual funds have a three-year-long lock-in period. These funds offer very less liquidity, and investors should be aware of this feature at this stage. They must accordingly decide on their investment amount. It is at this stage that the investor can select the fund of their choice and make the investment.

    • Reassessment: After investing, the investor must keep revisiting their ELSS investment to check if it aligns with their larger investment goal(s). If their ELSS investment does not align with their investment goal(s), they must reassess and make changes. An SIP investment calculator can help investors with this too.

    In the five-step procedure outlined in this article, the role of online mutual fund returns calculators emerges as being extremely crucial. Investors must make the most of these online tools since they help them plan for their ELSS investments in advance. The utility of these calculators goes beyond helping investors calculate their returns, since they can also be used to assess one’s risk-taking capacity. Investors can enter different values of investment amounts and tenures to assess their own capacity of taking risks through their ELSS investments.  
     

  • ‘Sochna Kya Hai?’ Axis Mutual Fund asks in new ELSS campaign

    ‘Sochna Kya Hai?’ Axis Mutual Fund asks in new ELSS campaign

    Mumbai: Every year, tax season is a time when discussions around how, where, and when to save taxes gain momentum. These conversations often tend to be anxious, given that a significant majority doesn’t plan their tax-saving strategies well in advance. “Tax ka kya socha hai?” is a question that gets thrown around quite a bit during tax season.

    Axis Mutual Fund’s answer to that? “Sochna Kya Hai, ELSS Hai Na.”

    It has teamed up with Mirum, the digital solutions agency from the Wunderman Thompson Network for a new investor awareness campaign illustrating the confidence that comes with a well-planned tax investment strategy.

    In their latest campaign for the tax-saving mutual fund category ELSS, Axis Mutual Fund takes a different approach to getting people to invest. Instead of a doomsday plea to invest in ELSS before time runs out, with “Sochna Kya Hai”, the communication is aspirational – the implication is that those who’ve planned their taxes with ELSS needn’t worry themselves sick during tax season.

    The campaign films show how the protagonists seem indecisive about other life decisions, but when it comes to their tax planning, they’re not too worried – “Kyunki Sochna Kya Hai, ELSS Hai Na.”

    Axis Mutual Fund head of marketing and digital Boniface Noronha said, “We’re looking forward to the reactions to this campaign – it’s a proposition we’re excited about, one that blends perfectly with who we are as a brand. The messaging is relevant, given how mutual funds aren’t the niche investing category that it once considered in India. We have plans to take this campaign forward in many ways even after the tax season, so we’re gearing up for that even as we speak.”

    Miruum India ECD Naila Patel said, “Sochna Kya Hai…is in many ways a continuation of #TaxFever, and the two campaigns mirror the general public’s attitudes towards mutual funds. While with #TaxFever we identified the procrastination around making tax-saving investments, Sochna Kya Hai…is a commentary on the increasing confidence people seem to have in mutual funds for tax savings. We also adopted a rustic, quirky approach here because that kind of humour is something that cuts across audiences, even for something as non-humorous as tax planning! Not to mention the protagonists here exemplify responsible financial behaviour, which is what the brand is all about.”

  • ETMoney uses shock and humour to promote tax-saving among mobile-first millennials

    ETMoney uses shock and humour to promote tax-saving among mobile-first millennials

    DELHI: The end of every financial year is quite a stressful time for the salaried class as they try to manage their hard-earned money through effective tax-saving plans. The pressure of government deadlines amidst the constant hustle of the work leads to buying of tax-saving products which don’t actually benefit much. To counter this, ETMONEY is promoting its unique tax-saving proposition that enables customers to save up to Rs 78,000 in tax savings.

    The campaign, conceptualised by DAIKO FHO and produced by Cellardoor in partnership with the Times Internet marketing team led by COO Santosh Navlani features a TVC starring standup comedian and comedy writer Biswapati Sarkar and actor Namit Das. To know more about the campaign, Indiantelevision.com interacted with ETMONEY COO and head of marketing Santosh Navlani, who outlined the basic idea of the campaign and its marketing plans. Edited excerpts follow:

    Elaborate more on the campaign: from ideation to execution, what were the touchpoints you were planning to address? 

    The core idea behind the campaign is that at the end of every financial year, Indians clamour to get done with their tax-saving investments. In the rush to meet the deadline, most people just buy tax-saving products without evaluating if it's doing anything for them beyond the tax-saving. Most often, it is akin to giving away the Rs 100 on something just because you will save Rs 30 (max 30 per cent tax saving). In this rush to save Rs 30, we forget Rs 70 of our hard-earned money is also getting deployed and should ideally make you better off financially or otherwise.

    Another part of the problem is that people don’t really know what the maximum tax they can save is. Taxation laws in India are notoriously complicated and figuring out various deductions, the clauses for each and then knowing your maximum tax saving limit is not something that everyone knows at the back of one’s hand. This results in taxpayers leaving money on the table.

    With this campaign, our aim is to help Indian taxpayers not only save maximum tax possible but also do it in a way that helps them better their financial lives. As part of the campaign, we first built a solution on ETMONEY that after looking at the user's current life stage and investment gives them a personalised tax plan. It details the maximum tax someone can save along with products where they should invest. 

    The second part was ensuring we have all the tax-saving products we suggest to be made available for purchase. With this, we are India’s only non-banking fintech app that helps people plan to save as high as Rs 78,000 in taxes & make instant online purchases, right from their smartphones.

    Do you think the Indian millennial is serious about tax saving? Most of the marketers see the generation as someone who believes in spending more than saving?

    The last quarter of any financial year is the time when every salaried Indian, including millennials think of tax savings, either due to self-realization or due to reminders from HR/Payroll managers. Due to this, there is a big population that comes new-to-market every year as well as people who either have missed the bus of tax-saving in the past or have planned/saved tax earlier that they need to do much more structured in the new year. So, while the audience believes in living life to fullest & maximum spending, the external factors definitely create an environment for them to become self-aware of the need to plan one’s taxes well. We are banking upon this big cohort of such individuals to drive maximum savings for themselves as well as impact for the brand.

    Why did you choose Biswapati Sarkar and Namit Das as the face of a campaign? Why do you think a comedian talking about investments will make the cut?

    Tax & finance can be mostly boring or has been overly emotional on television advertising. Tax-saving is important, but given the mobile-first Indian millennials we want to target, we wanted to drive home the point through shock or humour. Shock has been demonstrated through one not even being aware that Rs 78,000 tax saving is possible (most people who know, know that it is Rs 46,800). When not shock, we have used humour through the “crazy happiness” one gets when some finds a sum of lost money (i.e. when one accidentally finds some money which was either written off or lost).

    Biswa brings that lightness we wanted in the communication to the brink of being scary (through shock). On the other hand, Namit Das is truly representative of ETMONEY users. Young, suave and someone who really knows that making his money work hard is as important as earning it.

    What is the effective marketing strategy for the campaign? On which channels and media are we going to see it?

    We have significant budgets lined up for promotions across TV, print, outdoor & digital. We are also planning to leverage our audience’s love & passion towards music by producing a music video on tax (a fun song we believe people would want to listen to again & again). Besides, we have created tons of education material that we are putting on YouTube as well as distributing that content via our app & other properties. On outdoor, we are using a concentrated strategy on metro trains, airports & areas where working population flocks.

    Our audience on TV is mostly working or earning population. There is a strong affinity towards Live Sports. Hence we are leveraging Live Cricket on TV & OTT platforms. Given our audience likes to stay updated on current events, we are leveraging the reach of news on TV as well as OTTs. We are also making weekend entertainment as well as movies to build out the reach further & increase the frequency.