What are various Long-term financial options available for investment?

What are various Long-term financial options available for

investment?

Post Office Savings Schemes, Public Provident Fund, Company Fixed

Deposits, Bonds and Debentures, Mutual Funds etc.

Post Office Savings:

risk saving instrument, which can be availed through any post office.

It provides an interest rate of 8% per annum, which is paid monthly.

Minimum amount, which can be invested, is Rs. 1,000/- and

additional investment in multiples of 1,000/-. Maximum

amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held

Jointly) during a year. It has a maturity period of 6 years. Premature

withdrawal is permitted if deposit is more than one year old. A

deduction of 5% is levied from the principal amount if withdrawn

prematurely.

Post Office Monthly Income Scheme is a low

Public Provident Fund:

maturity of 15 years and interest payable at 8% per annum

compounded annually. A PPF account can be opened through a

nationalized bank at anytime during the year and is open all through

the year for depositing money. Tax benefits can be availed for the

amount invested and interest accrued is tax-free. A withdrawal is

permissible every year from the seventh financial year of the date of

opening of the account and the amount of withdrawal will be limited

to 50% of the balance at credit at the end of the 4th year

immediately preceding the year in which the amount is withdrawn or

at the end of the preceding year whichever is lower the amount of

loan if any.

A long term savings instrument with a

Company Fixed Deposits:

medium-term (three to five years) borrowings by companies at a

fixed rate of interest which is payable monthly, quarterly, semiannually

or annually. They can also be cumulative fixed deposits

These are short-term (six months) to

10

where the entire principal alongwith the interest is paid at the end of

the loan period. The rate of interest varies between 6-9% per annum

for company FDs. The interest received is after deduction of taxes.

Bonds:

more than one year with the purpose of raising capital. The central or

state government, corporations and similar institutions sell bonds. A

bond is generally a promise to repay the principal along with a fixed

rate of interest on a specified date, called

It is a fixed income (debt) instrument issued for a period ofthe Maturity Date.

Mutual Funds:

which raises money from the public and invests in a group of assets

(shares, debentures etc.), in accordance with a stated set of

objectives. It is a substitute for those who are unable to invest

directly in equities or debt because of resource, time or knowledge

constraints. Benefits include professional money management,

buying in small amounts and diversification. Mutual fund units are

issued and redeemed by the

the fund's net asset value (NAV), which is determined at the end of

each trading session. NAV is calculated as the value of all the shares

held by the fund, minus expenses, divided by the number of units

issued. Mutual Funds are usually long term investment vehicle

though there some categories of mutual funds, such as money

market mutual funds which are short term instruments.

These are funds operated by an investment companyFund Management Company based on