BY - KUSHAL MANSUKHANI ALKESH BHATT

SAVING : Saving in our daily life generally means as putting money aside for rainy days. SAVING is usually for putting away money for short term needs, to afford things like holidays, weddings or just the rainy days.

INVESTMENT: Investment is done with a view to earn returns. INVESTING usually means saving for a longer term, so that you can grow your money and be able to afford something in the future. Most investments have some element of risk, but over the long term they also tend to give you a better potential growth.

POST OFFICE SCHEMES

Post Office Monthly Income Scheme

Features: Only one deposit is available Only individuals can open the account The minimum investment in a Post-Office MIS is RS 1500. Duration of MIS is 6 years Gives a return of 8% + a bonus of 5% on maturity. However this 5 percent bonus is not available in case of premature withdrawl.

KISAN VIKAS PATRA ( KVP)

It aims at providing double the amount on maturity. Term = 8 years, 7 months Interest = 8.4% Does not qualify for deduction u/s 80c Withdrawl facility available after 2 and a half years Minimum amount= RS 1000, Maximum= No limit

NATIONAL SAVINGS CERTIFICATE Term = 6 years Interest rate= 8%, compounded semi annually No premature encashment Qualifies for deduction u/s 80C. It is backed by the Government of India and hence it is considered to be a safe investment.

POST OFFICE TIME DEPOSIT SCHEMES

This instrument is similar to the bank FD Min deposit= Rs 200, Max= No limit Interest income is taxable Theinterest is paid on an annual basis but is calculated on a quarterly basis. 1 year 6.25% 2 years 6.50% 3 years 7.25% 4 years 7.50%

EMPLOYEE PROVIDENT FUND Vehicle for saving for salaried employees Each employee has a separate PF account in which both the employee as well as the employer contributes a certain amount of money every month. Contribution of the employee is allowed for deduction u/s 80c Government decides their rate of interest every year PF balance cannot be attached under any court ruling- Encumbrance Free Estate Creation.

PUBLIC PROVIDENT FUND A very common and popular vehicle of tax saving and investment in INDIA. A PPF account can be opened by any invidual as well as HUF. The term of the PPF account is 15 years. However it receives 16 years of contributions. This is so because 15 years period is calculated from the financial year following the date on which account is opened. PPF account can be opened in specified branches of Nationalized banks and Post Offices. Contributions made qualify for deduction u/s 80c. One partial withdrawl is permitted every year from 6th year onwards.

WHAT IS A MUTUAL FUND ? A mutual fund is a professionally managed type of collective investment that pools money from many investors to buy stocks, bonds, shortterm money market instruments, and/or other securities.

ADVANTAGES OF MUTUAL FUNDS

Mutual funds have advantages compared to direct investing in individual securities. These include: Increased diversification Daily liquidity Professional investment management Ability to participate in investments that may be available only to larger investors Service and convenience Government oversight Ease of comparison

DISADVANTAGES OF MUTUAL FUNDS Mutual funds have disadvantages as well, which include: Fees Less control over timing of recognition of gains Less predictable income No opportunity to customize.

OPEN-END FUNDS
Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; these shares are also priced at net asset value. A professional investment manager oversees the portfolio, buying and selling securities as appropriate. The total investment in the fund will vary based on share purchases, redemptions and fluctuation in market valuation.

CLOSED END FUNDS

Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. Investors who no longer wish to invest in the fund cannot sell their shares back to the fund (as they can with an open-end fund). Instead, they must sell their shares to another investor in the market; the price they receive may be significantly different from net asset value. It may be at a "premium" to net asset value (meaning that it is higher than net asset value) or, more commonly, at a "discount" to net asset value (meaning that it is lower than net asset value). A professional investment manager oversees the portfolio, buying and selling securities as appropriate.

UNIT INVESTMENT TRUST

Unit investment trusts or UITs issue shares to the public only once, when they are created. Investors can redeem shares directly with the fund (as with an open-end fund) or they may also be able to sell their shares in the market. Unit investment trusts do not have a professional investment manager. Their portfolio of securities is established at the creation of the UIT and does not change. UITs generally have a limited life span, established at creation.

EXCHANGE TRADED FUNDS A relatively recent innovation, the exchange-traded fund or ETF is often structured as an open-end investment company, though ETFs may also be structured as unit investment trusts, partnerships, investments trust, grantor trusts or bonds (as an exchange-traded note). ETFs combine characteristics of both closed-end funds and open-end funds. Like closed-end funds, ETFs are traded throughout the day on a stock exchange at a price determined by the market. However, as with open-end funds, investors normally receive a price that is close to net asset value. To keep the market price close to net asset value, ETFs issue and redeem large blocks of their shares with institutional investors. Most ETFs are index funds.

WHAT ARE SHARES AND WHY ARE THEY ISSUED? Shares represent ownership of a company. When an individual buys shares in your company, they become one of its owners. Shareholders choose who runs a company and are involved in making key decisions, such as whether a business should be sold. While shares are most obviously associated with the stock market, most small businesses don't go near a stock market in their lifetime. They are more likely to issue shares in their company in return for a lump sum investment. This investment may either come from friends and family or, for businesses that are looking for capital to fund high growth, through formal equity funding finance.

HOW TO INVEST IN A SHARE MARKET?

Types Of Sectors Identify the Best Sector How To Invest ? Terms Of Investment SHARE TRADING HOUSES

TYPES OF SHARES
A company may have many different types of shares that come with different conditions and rights. There are four main types of shares: ORDINARY SHARES PREFERENCE SHARES CUMULATIVE SHARES REDEEMABLE SHARES

WHAT IS INSURANCE ?
A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional.

TYPES OF INSURANCE :

Life Insurance Property Insurance Health Insurance Auto Insurance Travel Insurance Insurance At Amusement Points Credit Insurance Third Party Insurance

India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies taxes on income (except tax on agricultural income, which the State Governments can levy), customs duties, central excise and service tax. Value Added Tax (VAT), (Sales tax in States where VAT is not yet in force), stamp duty, State Excise, land revenue and tax on professions are levied by the State Governments. Local bodies are empowered to levy tax on properties, octroi and for utilities like water supply, drainage etc. In last 10-15 years, Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement. The process of rationalization of tax administration is ongoing in India.

DIRECT TAXES
In general sense direct tax is one paid directly to the government by the persons on whom it is imposed Eg- Income Tax, Corporate Tax, Transfer Tax etc.

INDIRECT TAX
An Indirect Tax can be shifted from one person to another. Eg- fuel, liquor, and cigarrette taxes. An indirect tax is such which can be shifted or passed on.

Income Tax Rates/Slabs for Assessment Year 2012-13 (FY 2011-12)

Income Tax Rates/Slabs Upto 1,80,000 Upto 1,90,000 (for women) Upto 2,50,000 (senior citizens) 1,80,001 5,00,000 5,00,001 8,00,000 8,00,001 and above Rate (%) NIL

10 20 30

Income Tax Rates/Slabs for Assesment Year 201112 (F Y 2010-11)

Income Tax Rates/Slabs Rate (%)

Up to 1,60,000 Up to 1,90,000 (for women) Up to 2,40,000 (for resident individual of 65 years or above)
1,60,001 5,00,000

NIL

10

5,00,001 8,00,000
8,00,001 upwards

20
30

To earn good return with less capital risk a investor has to be active while designing his portfolio. An investor should go with a well diversified portfolio in compare to sticking on to one or two investment avenue. Investors should update their knowledge continuously to grab good opportunities in the market. Investors should take decision carefully because updation of portfolio is an expensive affair.

We would like that to thank Ms. Insha Patel for giving us this opportunity to get an in-depth knowledge about the various investment schemes and we also got an insight about it.

http://www.mutualfundsindia.com/ http://en.wikipedia.org/wiki/Mutual_fund http://www.businesslink.gov.uk/bdotg/actio n/detail?itemId=1074433247&type=RESOUR CES http://en.wikipedia.org/wiki/Insurance http://www.lifeinscouncil.org/consumers/wh at-is-insurance