When I visited my friend’s place, a cousin of my friend was at his place and he was inviting him for a treat over the weekend. He was giving the treat for the job offer he received from a Pharma company during the campus placements. It was really pleasant to hear someone NOT getting into IT band wagon. I was curious to know how much non-IT companies offer. Even though people say, “Do not ask the salary of man and age of a woman”, I asked him how much they offered. It was a very decent offer and is comparable to what IT companies offer for an engineering graduate just out a college.
Now that he is soon going to become financially independent, I asked him, “It is a very good offer, what will you do with the salary, do you have any plans?”. He said every thing about what all he want to buy and list of places he want to visit and to my disappointment he did NOT say, “I will start investment for future”.
It is very important to start saving/investment at early age, else one has to invest lot more amount at later stage to get the same returns (Experience speaks :-) ). I would say investment is also an art. At the end of the day, it is the proper investments (at right time) that give you the high returns.
There are several investment plans people advice from high risk to low risk depending on the income, age of the person, their financial goals and future commitments. For all the young people who are getting into job at a minimum I would suggest them to invest in Public Provident Fund (PPF) from the first month itself.
As per the new revised Direct Tax Code (DTC), the new tax code proposed to be replacing the Income Tax Act, 1961, PPF will continue to be under exempt-exempt-exempt (EEE) regime.
PPF account is exempted under all three stages.
Stage 1 Exempt - When you make deposit in your PPF account you get tax deduction under section 80C.
Stage 2 Exempt - The accumulation of interest in your PPF account is also tax exempted.
Stage 3 Exempt – The time of maturity when you withdraw your money, this amount is tax exempted.
Tips of investing in PPF
Now that he is soon going to become financially independent, I asked him, “It is a very good offer, what will you do with the salary, do you have any plans?”. He said every thing about what all he want to buy and list of places he want to visit and to my disappointment he did NOT say, “I will start investment for future”.
It is very important to start saving/investment at early age, else one has to invest lot more amount at later stage to get the same returns (Experience speaks :-) ). I would say investment is also an art. At the end of the day, it is the proper investments (at right time) that give you the high returns.
There are several investment plans people advice from high risk to low risk depending on the income, age of the person, their financial goals and future commitments. For all the young people who are getting into job at a minimum I would suggest them to invest in Public Provident Fund (PPF) from the first month itself.
As per the new revised Direct Tax Code (DTC), the new tax code proposed to be replacing the Income Tax Act, 1961, PPF will continue to be under exempt-exempt-exempt (EEE) regime.
PPF account is exempted under all three stages.
Stage 1 Exempt - When you make deposit in your PPF account you get tax deduction under section 80C.
Stage 2 Exempt - The accumulation of interest in your PPF account is also tax exempted.
Stage 3 Exempt – The time of maturity when you withdraw your money, this amount is tax exempted.
Tips of investing in PPF
- Instead of whole lump sum amount deposited once per year, try deposit every month.
- Make sure that you invest by the 5th of every month. Interest is calculated on the lowest balance between the close of the fifth day and end of the month. If you invest Rs 5000 before 5th of every month, with 8% interest rate at the end of 15years you get Rs 17,41,725.72.
- Ensure that you continue to make a minimum deposit of Rs. 500 every year.
Starting to investing early with age on your side is best foot forward toward building a STRONG retirement corpus. Another advise you can give to salaried is investing in EPF. An interesting read on this @ http://goo.gl/RNMps
ReplyDeleteI would like to add another comment on this,though I do not have any proof on that. Please correct me if I am wrong, or add the proof. PPF is the fund of yours which can not be touched by Govt.or any other company in any circumstances other than your consent. What I wanted to mean is even you owe some money to somebody, they can't cease this account and take the money from here..... :)
ReplyDeleteSame advice I have been giving all my cousins, invest early. And PPF is a good easy way to get started.
ReplyDelete