Investment is an opportunity, which we cannot afford to miss. Surprisingly, many people think Savings and Investment are the same! But that’s not the case. Savings is something that we park for shorter time horizon just like your savings account for Expenses like your child’s school fees, short term travel goal or expense goal etc. At any given time your savings account should not have an amount excess to your 3 months expenses. Anything over and above that amount lying idle in that account Is just yielding you the savings account interest and you are loosing the opportunity to create Wealth.
Regarding investment, on the other hand its the amount you can park in investments which will fulfill your long term goals like Child’s higher Education, Child’s marriage, your and your spouse retirement, New Home purchase, foreign trip, New Car, etc.
Building wealth is a Marathon, it’s not Sprint, Discipline is the key ingredient. Successful investing takes Time, Discipline and Patience. No matter how great a talent you have or efforts you make, some things just take time. Successful investing is all about managing risk and not avoiding it. We at USP FinPro understand our client’s risk appetite, their time horizon, type of goal and guide the client with the appropriate products. As a rule of thumb we try to diversify the investment since the essence of investment management is the management of risks and not management of returns.
At USP FinPro, we also educate our clients about the Spending habits, since its’ not the salary that makes you rich, it’s your spending habits that will. About planning, since failing to plan is definitely a way to plan to fail. About investing, since investing money is the process of committing resources in a strategic way to accomplish a specific objective. All these habits in turn help the Clients to reap better returns from their own investments which will last for their lifetime and also they can proudly leave a legacy for their generations to come.
The Investment options that we provide and recommend are
Mutual funds is a very popular and most spoken about type of investment these days. Its’ a type of investment which every investor needs to have in their portfolio to beat the inflation in the long term.
It collects a pool of money from many investors to invest in securities like stocks, bonds, money market instruments and other assets. It’s a structured type of investment which maintains the investment objective of the particular fund selected as stated in its prospectus. In the course of time the selected mutual fund produces capital gains or income for its investors. Mutual funds invests in a vast number of securities, performance is usually tracked as the change in the total market cap of the fund, derived by the aggregating performance of the underlying investments.
Mutual funds are classified into several kinds of categories representing the kinds of securities they invest in, their investment objectives as per the prospectus and as per the type of returns they are capable of seeking.
The funds available for investing are Equity Funds, Fixed Income Funds, Index Funds, Balanced Funds, Money Market funds, Bond Funds, Global Funds, Sectoral Funds, Exchange traded Funds, etc.,
These are Unit Linked Insurance Plans (ULIP) is an investment product that provides for Insurance payout benefits along with the investment opportunity. This type of investment requires a premium payment which is invested for capital appreciation. These plans can be taken by clients planning for the Insurance cover, retirement, child’s education, etc. Due to the life insurance benefit, the beneficiary will receive the payments following the owner’s death. ULIPs are suitable for persons who do not prefer to take Term plans. It’s a smart way of choosing Protection and Investment in one instrument of investment. This instrument is also preferred specifically since it gives the 80 C benefit as well as the 10(10) D benefits of Income tax because of which the maturity from this instrument is tax-free as per current tax laws. Depending upon market conditions internal switching options are also available.
It’s a great instrument to regularly put aside a certain amount every month/ quarter / half-yearly / annually to get a fixed return in a stipulated period of time. These are essentially Life Insurance product, which gives a dual benefit of Protection as well as savings for the longer term goals like Children education or marriage, one’s own retirement, etc but not limited. If the policy holder survives the policy period he/ she gets the maturity else the family receives the insurance proceedings. In both the cases the money received is tax exempted under 10 (10) D. The individual looking for fixed and guaranteed returns over a period of 15-20 years this product suits well. These section products are now available in limited payment period (5, 7, 10 years, etc) mode and also available for comparatively shorter term like maturity in 10, 15, 20 years which make it suitable for Children education / marriage / or own and spouse retirement, where the money to be received is Fixed and Guaranteed. In growing economy like India, where the interest rates are reducing a fixed return product is a sigh of relief for the investors.
Company Fixed Deposit (Corporate FD) is a term deposit which is held over fixed period at fixed rates of interest. Company Fixed Deposits are offered by Financial and Non-Banking financials companies (NBFC’s). The maturities of various Company Fixed Deposits can range from 1 year to a few years. Also the interest earned can be opted for monthly / quarterly / half yearly / yearly /cumulative basis depending upon the payout option selected.
This instrument is normally preferred by the persons who are looking out for fixed returns options and do not intend to take the market risk on their Capital. The interest earned though is not tax-free, however the Client can be assured of the fixed returns for the stipulated period of the Fixed Deposit.
We at USP FinPro, recommend only the AAA+ rated secured type Company Fixed Deposits, since we believe that the Return of the Corpus is more important than Return over Corpus.
We at USP FinPro, always strive to give all solutions under one roof. Capital gains tax exemption
Bonds are also known as 54 EC bonds, as investment in these bonds allows exemption under section 54EC of the Income-tax Act. These bonds are offered to investors who earned long-term capital gains from land or building (Residential or Commercial) or both and would like tax exemption on these gains. The maximum limit for investing in 54 EC bonds is Rs. 50, 00,000. The eligible bonds under this section are REC (Rural Electrification Corporation Ltd.), PFC (Power Finance Corporation Ltd.), NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Ltd.)
These bonds are safe and AAA rated. The interest on 54 EC is taxable. No TDS is deducted on interest from 54 EC bonds and it is Wealth Tax exempted. 54 EC bonds have a lock-in period of 5 years (effective from April 2018) and are non-transferrable. A minimum of 1 bond amounting to Rs. 10,000 and the maximum investment in 54 EC bonds amounting to Rs. 50 lakhs in a financial year. 54 EC bonds offer 5.75% rate of interest payable annually.
The bonds suit conservative investors who are looking for assured and fixed returns with complete safety for their principal amount. However, currently the interest rate is not high enough compared to instruments that a retiree usually looks at. If an individual has already exhausted the limits of the Post Office Monthly Income Scheme (Rs. 4.5 Lakhs) and Senior Citizen Savings Scheme (Rs, 15 Lakhs) and looking for a return higher than the bank deposits, one can consider the GOI bonds provided the individual is fine with the locking conditions in mind.
This investment can be done by the Resident Individual / joint holders / anyone or survivor mode. The investment option is also available to be done on behalf of a minor as a parent or guardian, even HUF’s can apply. There is no maximum limit for investment in these bonds. These bonds cannot be traded in the secondary markets.
The bonds are issued in Cumulative and Non-Cumulative forms. For the Non-cumulative the interest is payable at half-yearly intervals from the date of issue. For the Cumulative form the interest will be compounded with half yearly payable on maturity along with the principal.
The interest earned on the bonds will be added to the individual’s income and is taxable as their tax rate. However it is exempted from the Wealth Tax. The TDS is deducted at source. The bonds have tenure of seven years; however the bond can be redeemed before maturity based on the age of the investor at the time of exiting. This premature redemption comes at a cost though.
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