Wednesday, July 9, 2014

Difference between Public Provident Fund (PPF) and Fixed Deposit (FD) for Long term

In this article, we will understand difference between two of the best investment option of conservative investors, PPF or Public Provident Fund and Fixed Deposit, known as FD. Both PPF and FD provides capital guarantee and considered safest investment. PPF is even backed by government while FD is backed by banks and RBI, but which one is better for long term investment. Where should one put his hard earned money for long term growth with guarantee, we will find it in this post.  Other day, one of my friend was asking me for an investment option, where he can put money for his daughter's education. His daughter is currently 4 years old, and he wants to save money for higher eduction. It means she will need money when she would be 17 to 19 years old, which gives us  time horizon of 13 to 15 years. My first suggestion to him was put this money on Equities because we are talking about long term, and I believe given India's growth prospect for next 15 years, equities is the best investment option. Unfortunately my friend is very conservative about money, he is OK with earning less interest but not comfortable with losing his hard earned money. So I suggested him about PPF or Public Provident Fund and long term Fixed Deposit with any public sector or private sector bank. To my surprise he was completely unaware of PPF and didn't have PPF account either. He was quite familiar with FD and convenience, guarantee and current interest rate it offered, but again he wasn't aware of taxation on fixed deposit and returns after tax. That encouraged me to write this blog post, not just for him but for other people who knows about PPF and FD but doesn't know crucial details which matters. By the way, if you are an NRI investor then you got one more better option, NRE fixed deposit, which is completely tax free.

Friday, May 23, 2014

Does it Right time to Invest in Indian Stock Market?

I was thinking is it right time to invest in Indian Stock Market? As no one can predict equity or time the market, for long term investor, every time is right time. Looking at what happening at the moment in India, as it just got a stable government with everyone from common people to corporate world is hoping no non-sense governance, things really look very attractive. Indian stock market are in roll from March, stocks like SBI has gained almost 100% or doubled within three months. Indexes like BSE Sensex and NSE Nifty have touched their all time highs, with BSE inching towards 25000 and NSE towards 7500, shows confidence of FII (Foreign Institutional Investor) in India's growth story. Looking at pure growth potential, there is tremendous opportunity in Infrastructure, health, finance and every other sector. India is big country with full of resource and man power, all it was missing was a stable, decisive and no non-sense government. If you look at other trends e.g. USD going down against INR, its also a good hedge for NRI investors, who wants to keep their money in Indian rupees. In next section, I will list down my reasons or Why I think its right time to invest in Indian Stock Market, and I hope same from you. Let me know if you agree or disagree, and your reasons to invest in India equities.

Wednesday, February 12, 2014

Yes, Transfer Money form NRO to NRE Saving Account, FCNR is Allowed

Not many NRIs (Non resident Indians) knows that, from May 2012, NRI can transfer fund from NRO account to NRE account in India. Earlier this was not the case, though you can transfer funds from NRE to NRO account, reverse was not allowed. Only way to fund your NRE saving account was through your offshore income earned in foreign currency. Things has changed, The Reserve Bank now allows non-resident Indians (NRIs) to transfer funds from non-resident ordinary (NRO) account to Non-Resident External (NRE) account subject to a ceiling of $1 million in a financial year. This move is encouraging as now NRI can make maximum use of their funds and can transfer to overseas, when they needed or when they feel its better investment opportunity. As I have said before, an NRE saving account is for depositing income from abroad, while an NRO saving account is mainly for putting Indian incomes. There are also few more important difference between them e.g. In case of NRE account, only NRIs can become joint account holders but for NRO account both resident and non-resident can become joint account holders, you can see my post 5 difference between NRE and NRO accounts for more detail.

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