Invest Rs. 500 Monthly, Earn Rs. 2,71,061 on Maturity: 100% Safe

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Investing is a key to safeguard your financial future. No longer can you rely on interest earned on savings account to meet the future expenses. Especially for salaried individuals it is very essential to invest money regularly because of uncertainty in the job market coupled with the rising inflation.

Whether the amount is small or large, regular investment for a long term is the best recommended solution to generate sufficient corpus that can take care of your daily needs during the retirement period or other future expenses such as child’s marriage, higher education, medical expenses, and others.

In this article we will consider investing Rs. 500 every month (i.e. Rs. 6, 000 annually) and the estimated returns. Such investments are best recommended for conservative investors who do not want to take risk with their hard earned money.

There are many options where an individual can put their money giving 100% assured returns i.e. zero risk products. The only drawback of such investment is that the returns are small. Safety of money is of high importance.
Instruments falling under zero risk category are – public provident fund (PPF), bank fixed deposit (FD), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), and few others.

Here’s the table showing the returns (post maturity) after investing Rs. 500 every month i.e. Rs. 6, 000 (yearly):

Investment ProductInterest RateStandard Tenure (In Years)Invested Amount (In Rs.)Expected Return/Maturity Amount (In Rs.)
Sukanya Samriddhi Yojana8.3%1484, 0002, 71, 061
Bank Fixed Deposit10.25%1060, 0001, 98,096
Tax Saving FD6.9%530, 00040, 350
Public Provident Fund8.1%1590, 0001, 77,484
National Savings Certificate8.4%56, 0009, 053
Recurring Deposit6.5%1060, 00084, 494
Senior Citizen Savings Scheme (SCSS)8.6%530, 00042, 900

As you can see above, Sukanya Samriddhi Yojana (SSY) is the best investment option especially when you have a girl child. You need to invest only for 14 years and the returns are very significant. Read more on SSY here.

The tenure for few products is varying and its upto the investor to decide for what period investment should be done. For e.g. bank fixed deposit can be opened for minimum 7 days and each bank offers different interest rate, interest rate on government run schemes such as PPF & SSY keep on changing periodically, recurring deposit can be done for 1 year as well and so on. But as mentioned above, long term investment in low risk products will only provide higher return. Although the returns are less compared to high risk high return products.

Also, the interest rates for the above listed risk-free investments keep on changing and also vary with each entity.

There are other products for no risk taking investors such as gold, silver, diamond, tax-free bonds but the investment amount required is significant. But the ones listed above are the highly recommended and used by the low income investors.

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Invest Rs.3000 per Month & Earn 16 Lakhs on Maturity

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Investment experts always recommend to start investing early in life no matter what the amount is – small or large. The golden rule of investing remains the same. That is – invest small/large but do it regularly for a long term.

Not everyone has financial capacity to invest large sum of money. So in this article, we’ll consider a small amount of Rs. 3000 invested every month and the expected returns from various investment products available in India.

There are two types of investors:

  • Zero or no risk takers
  • High/moderate risk takers

We’ll consider each of the above type and calculate estimated returns in various investment products:

Zero Risk Investments:

There are many instruments falling into this category which also offer decent returns.

  • Public Provident Fund (PPF): Rs. 3000 monthly investment in PPF for the standard period of 15 years will fetch return income of around Rs. 10, 80,000 (Rs. 10 Lakh, 80 Thousand). Here we have assumed average interest rate of 8.1%.
  • Sukanya Samriddhi Yojana: This scheme is especially for the girl child. A yearly investment of Rs. 36, 000 per annum (i.e. Rs. 3000 per month) for the tenure of mandatory 14 years, will fetch a return of Rs. 16, 61,207 (Over 16 Lakh) after 21 years @ interest rate of 8.2%. Read more on SSA.
  • Fixed Deposit: Investing in bank fixed deposit offers safety although the returns are low compared to other zero risk investment instruments. If you invest Rs. 3000 per month for a period of 1 year; then the return amount would be Rs. 38, 700.
  • National Pension System (NPS): This is another guaranteed return investment product offering interest of around 8%. If three thousand is invested for 25 years i.e. Rs. 9, 00,000; then the interest earned on the investment would be Rs. 19, 47, 558. Subscriber would receive monthly pension of Rs. 6, 700 after reaching the age of 60 years.
  • National Savings Certificate: If you invest Rs. 36, 000 lump sum for the lock-in period of 5 year, then the returns would be Rs. 53, 033. The current interest rate is 7.9%.

With above mentioned risk free products, the returns are guaranteed. And your money is completely safe.

High/Moderate Risk, High Returns:

Mutual funds: A monthly regular SIP of Rs. 3000 after a period of 5 years, will earn return amount of Rs. 2, 69,045. Here the average return considered is 12%. If we assume return of 15%; then the maturity value would be Rs. 8, 35,971 after a period of 10 years.

Here are the top rated mutual funds of 2017 with the returns they’ve given in the last 1 year:

Fund Name1 Year Return (%)
ICICI Pru Top 100 Fund (G)29.6
ICICI Pru Top 100 Fund - Direct (G)31.1
SBI Blue Chip Fund (G)20.8
SBI Blue Chip Fund - Direct (G)22.1
Kotak Select Focus Fund - Direct (G)34.9
Kotak Select Focus Fund - Regular (G)33.3

All of the above mentioned funds have been ranked No. 1 by CRISIL.

ELSS: The most favorite tax saving instrument preferred especially by salaried individuals, of course, who are ready to take a risk, is equity linked savings scheme. With a lock-in period of just 3 years, the returns are spectacular. So Rs. 36, 000 invested for a period of 3 year in Reliance Tax Saver (ELSS) Fund (G) i.e. investment of Rs. 1, 08, 000; then the expected returns after 3 year would be Rs. 1, 59, 103. Assuming 21% average annualized returns. There are many high return ELSS funds in the market.

Direct equity: Either you go SIP way or invest directly in equity either yourself or through the advice of the broker. Equities have given highest return, provided you regularly invested for a long term horizon.

Take example of State Bank of India. If you had bought SBI stock worth Rs. 36, 000 (assuming Rs. 3000 invested in phases) in May-2016 when the stock price was hovering at around Rs. 165; then the return in April-2107 would would be around Rs. 61, 000. Which is the nearly 75% gain. The current stock price in April-2017 is Rs. 286. So if you spread portfolio in the best expert recommended stocks or any other relevant sources, then in the long run the returns is most likely to beat other options. But remember that, stock market investments are highly risky, as market conditions keep on changing.

So here’s the summary showing the returns you can expect after investing Rs. 3000 every month for the mandatory tenure or for long term in the above listed products.

Investment ProductReturn on Maturity/Interest Income Earned
Sukanya Samriddhi YojanaRs. 16, 61,207
Public Provident FundRs. 10, 80,000
National Savings CertificateRs. 53, 033
National Pension SystemRs. 19, 47, 558
Bank Fixed DepositRs. 38,700
Mutual FundRs. 8, 35,971
ELSSRs. 1, 59, 103
EquitiesRs. 61, 000

There are many investment options in India, however the ones mentioned in this article are most preferred and widely recommended by the experts. Real estate is one such investment which in comparison to any investment instrument offers, the highest return. However investing in real estate requires lot of money. So this is the reason, it is not covered in this article.

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ELSS Vs. PPF, NSC, Tax Saving FD – Differences

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Every year tax planning season begins in January-March. It is the time of the year when investors put their hard earned in investment instruments to save taxes. However many individuals make a mistake of keeping their objective to just save taxes and end up investing in products that do not generate enough wealth in the long run. This usually happens when financial goals are not set.

For those who want to save taxes and at the same time create wealth there are multiple options available in the market. And ELSS is one excellent product which stands out in comparison to other tax savers.

Here’s the table showing comparison of traditional tax saving instruments with ELSS on the basis of following key parameters:

  • Tenure of the product
  • Minimum investment amount
  • Risk involved
  • Most importantly the potential returns
Investment ProductLock-in Period (in Years)Returns CAGR per annumTax Status of ReturnsRiskPartial Withdrawal
Public Provident Fund150.081Tax FreeZeroPossible
National Savings Certificate50.081TaxableZeroNot Possible
5-Year tax saving bank deposit50.07TaxableZeroNot Possible
Equity Linked Savings Scheme319.68**Tax FreeHighNot Possible

The above returns from ELSS are as on November 2016.

The only risks associated with ELSS are:

  • Since the investments are market linked, the risks are higher as returns are not guaranteed. So past performance may not continue in the future. However it depends on the fund invested in. Check out zero risk investment options in India.
  • It carries a lock-in period of 3 years, so there is no way out to exit i.e. withdraw money from the fund if losses are predictable. Although the lock-in period is lowest amongst other tax saving investment products.
  • The diversification offered by these funds is across sectors and market capitalization. This allows your hard earned invested money to greatly benefit from the stock markets in terms of returns.

In addition to the above comparison table, ELSS offers multiple advantages over other tax savings instruments as follows:

Free insurance cover: Many ELSS funds free life cover to the investors. The premium cost is bourne by the MF company. And in the event of death of the investor, the insurance cover is used to pay the SIP amount.

Read about benefits of ELSS.

No cap on investment amount: Unlike few other tax saving instruments there is no limit on the maximum amount that can be invested in ELSS.

Ease of performance tracking: Every month the AMC releases the fund performance. So investor can track the minute details of how their hard earned money is invested and the returns generated at a regular interval. This helps investors to regularly track the list and type of stocks their money is invested in, sectors, and exposure in debt and cash.

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Tax Payers Love these 10 Benefits of ELSS – Returns, Lock-In, Tax Free & more

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In India, there are bunch of financial instruments in which money can be parked to claim tax deductions under section of 80C of the Income tax act. Although the advantages of investing for a long term cannot be emphasized more, there is an investment gem for tax payers – Equity Linked Savings Scheme – ELSS.

ELSS stands out in comparison to other tax saving instruments and is recommended for everyone. As the name suggests, ELSS is the only tax saving option with significant equity exposure.

So what are the benefits of ELSS funds?

Let’s get to know:

Highest Returns: ELSS is one of the very few investment products promises to beat the inflation, when invested in funds with a proven track record. Few of the top CRISIL ranked funds which has given highest returns are:

Name of Fund1 Year (% Return)2 Year (% Return)3 Year (% Return)CRISIL Ranking as on Dec-2016
(Source: CRISIL Website)
DSP Black Rock Tax Saver Fund (G)36.211.926.61
Birla Sun Life Tax Plan (G)21.17.124.51
Birla SL Tax Relief 96 (G)22.17.725.52
Kotak Tax Saver - Regular (G)32.9825.62
L&T Tax Advantage (G)31.99.623.32
Sundaram Tax Saver (G)35.49.723.83
Reliance Tax Saver (ELSS) (G)31.74.5303
Franklin India Tax Shield (G)22.86.8243
Axis Long Term Equity Fund (G)14.45.124.74

The 3 year return on all ELSS ranges from 23% to 26.5% as on 10th Feb 2017.

This clearly proves that even the average performing equity linked savings scheme fund has tremendous potential to grow your wealth which is higher than any of the guaranteed return tax saving options available in the market.  Check out zero risk investments in India.

Over years equity as an asset class has proven to be beat the inflation.

Dual benefits – tax saving and grow money: ELSS is an open ended equity mutual fund offering twin advantages – saving tax and long term wealth creation.

Shortest lock-in period: ELSS has a lock-in period of 3 years, which is lowest in comparison to other tax savings instruments.

Fundamentally, this 3 year period has advantage to the involved entities i.e. investor and fund manager. Both of them have necessary time to counter market volatility by assessing the risk. Since ELSS invests most of the corpus in equities, the investor has an edge to generate higher returns. And this benefit has been proven to beat inflation as shown in the above table. Note that 3 years starts from the day respective units are allotted and not from the day you start making investment.

So if anyone is planning for retirement or create wealth for child’s education 3 years ahead, then ELSS is worth recommended.

Read about high risk – high return investments in India.

Tax Saving: Investments made through ELSS funds qualify for tax deduction under section 80C of income tax act. At the highest tax bracket, Rs. 46,350 can be saved when investor plans to maximize the section 80C benefit.

Multiple funds to choose from: There are multiple ELSS funds available in the market. So investor gets multiple funds to compare and invest.

Ease of investment: Investor gets two options to invest in ELSS – lumpsum or SIP. Although lumpsum is not recommended as there is no option for purchase cost averaging and beat volatility. However SIP mode i.e. at a regular interval helps in disciplined investment approach. And most importantly risk can be tackled as you can stop yourself from entering into the downward moving market at the wrong time.

100% tax free returns: There are many tax free investment products whose returns are taxable. But this is not the case with ELSS, as the dividends and long term capital gain is completely tax free.

Free insurance cover: Many mutual funds companies have been recently launching schemes offering free life insurance cover with no additional cost. Premium is bourne by the MF company. The cover normally a certain % of the SIP account. In an event of demise of the investor, the insurance cover shall be used to pay the SIP amount. However there is a cap on insurance cover which is less than 20 lacs. Although small, insurance linked funds are worth to look at, if you do not have insurance policy.

No cap on investment amount: You can invest in ELSS through lump sum or SIP returns. And there is no ceiling on the upper limit on the investment amount. It basically means that an individual can invest beyond the Rs. 1, 50,000 limit.

Ease of performance tracking: Every month the AMC releases the portfolio in which the fund has invested. This helps investors to regularly track the list and type of stocks their money is invested in, sectors, and exposure in debt and cash.

Although appetite risk is a crucial factor separating ELSS investors. According to Association of Mutual Funds on India (AMFI), MF industry has been adding average 6.19 lacs SIP accounts each month; which is a huge number making ELSS a definite addition into the investors kitty.

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Switch ELSS Fund, Direct Equity Vs. Mutual Fund, Balanced Fund Importance & More

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Here are few questions commonly asked by mutual fund investors.

Can you switch from one ELSS fund to another with same or different fund house?

Switching ELSS is not allowed to different fund house. However if you want to move from one ELSS fund to another within the same fund then you will have to stop making contribution in the existing fund and start new investment in another.

Also be noted that ELSS funds have a lock-in period of 3 years.

If I plan to invest in multiple SIPs for a longer duration, what date should I start putting money?

There is no golden rule for investing on any day or date to start SIP. There is no return differentiation as in the long run, returns won’t change drastically if they are invested in a same month but at different date. But experts always recommend to invest in the first week of any given month.

Why investing through mutual fund is recommended over direct investment in equity?

Although anyone has an option to investing in equity directly, but investing in it through mutual fund is recommended especially to those who are not enough knowledgable or have time to track market. Reasons are fund managers and their team who manages respective funds are highly skilled and knowledgable. Decisions on what to invest in, when and how much to invest is taken by these managers and their team. It is their job. Investors only role is to go through all the terms and conditions of the fund and select the fund house and put money. Not everyone has time and especially knowledge of selecting best stocks from plethora of options, analyse, when to invest and exit, keep track of economy, market trends to name a few. So for such individuals investing through MF is worth recommended. Basically MF route minimizes losses, as careful evaluation is done before investing. And that’s what makes them easiest and safest way to invest in equity.

Why balanced funds should not be ignored over tax saving funds?

Compared to tax savings ELSS funds, balanced fund offers lower returns. However the risks involved are lesser in case of balanced fund also called as hybrid fund. The reason they are called hybrid is because investment is done in equity and debt in a certain ratio through asset rebalance, which is not possible in case of pure equity funds. The fall in market will not lead to higher losses in case of balanced fund. So for low risk investors, balanced funds offer higher returns compared to traditional options such as PPF, LIC, etc. but lesser returns compared to equity oriented funds which involves higher risk.

When should you invest in short term debt fund?

If your investment horizon is very short e.g. 3 months, then you should opt for short term funds. Other option is liquid fund which is tax efficient. But both these avenues involve risk. So in such case, bank fixed deposit is also a recommended solution.

Is there any mutual fund with zero risk involved?

Answer is NO. Every MF carries risk. So if someone who wants to play completely safe bet then public provident fund, bank fixed deposit, recurring deposit, Sukanya Samriddhi yojana, etc. are worth recommended. Check out zero risk, high return investment options in India.

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Investment of Rs.5000 in Mutual Fund for 25 Years Aged Individual

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Mutual fund investments has become popular as risk appetite of individuals have gone up. Here are few queries asked the readers of this blog.

How should an individual aged 25 years and earning Rs. 25, 000 per month invest in mutual fund?

25 years is an excellent age to enter investing in mutual fund through systematic investment plan. If such an individual is ready to invest Rs. 5000 every month in SIP, then long term systematic investing through SIP is recommended. Once such an individual arrives at the time frame for which regular investments are planned, then he/she should assess the risk tolerance and decide on an appropriate asset allocation which can be a mix of equity and fixed income. Then select the funds to start build a portfolio.

Top rated (Rank-1) CRISIL funds for the year 2017 are:

Large Cap1 Year % Returns as on 12Jan2017Small & Mid Cap1 Year % Returns as on 12Jan2017
DSP BR Focus 25 Fund (G)15.4DSP-BR Micro Cap Fund - RP (G)20.5
Kotak Select Focus Fund - Regular (G)18.3Franklin (I) Smaller Cos (G)18.3
SBI Blue Chip Fund (G)12.8Mirae Emerging Bluechip Fund (G)21.2

Finally, review the performance of these funds at least every year and accordingly make changes or rebalance your portfolio to maximize the gains.

What if someone has invested in an ELSS in the year 2015 for 2 years and wants to redeem or take money out?

Equity linked savings scheme or ELSS have a lock-in period of 3 years. It means that unless your investments complete three years, you cannot redeem them.

If someone has Rs 1 Lac and wants to invest for child’s future in mutual fund, how can he go about it?

A sizeable corpus can be created for the child’s future by investing regularly through SIPs in mutual funds. Consider long term goal of minimum 10 years and start investing in the following top rated diversified equity funds by CRISIL (Rank-1):

Diversified Equity1 Year % Returns as on 12Jan2017
Birla SL Advantage Fund (G) 18.5
Birla Sun Life Equity Fund (G)26.1
Birla SL India GenNext (G) 16.2
Principal Emerging Bluechip(G)20.4
Sundaram Rural India Fund (G)31.5

Assuming 1 Lac is deposited in bank, SIP can be started in any of the above two funds for a monthly sum for long term. However it is the duty of the investor to track the performance of the invested fund regularly and assess the growth and realign whether it is moving in the direction of achieving the set financial goal.

Someone who is aged 35 years and has just started investing in mutual funds through SIP in the funds SBI bluechip equity, Birla sunlife top 100, Mirae asset emerging bluechip and BNP Paribas mid cap. Has the investor selected best funds under his/her portfolio or another fund should be invested in?

The fund selection looks good and instead of adding new fund, he/she should increase the allocation to any of the existing investments. This is because, the performance of these funds has been good. Here’s the table showing 1, 3, & 5 year performance.

Name of Fund1 Year3 Year5 Year
HDFC Equity6.3915.7416.06
Mirae Asset India Opportunities7.0518.9219.07
HDFC Top 2008.113.914.63

If this investor still wants to put money in mutual fund, then he/she can try opting for ELSS which carries a lock in period of 3 years.

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Zero Risk, High Return Investments for Low Income Earners in India

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Intelligent investments can make anyone’s wealth to grow substantially. Although the definition of good wealth is very broad, here, we will define it as anyone who starts investing little money and generates enormous wealth after certain years i.e. the returns are far better than the invested amount.

For individuals who earn less and are sole breadwinner of the family, there is a very limited money to invest as they have to meet demand of various things such as day to day expenses for grocery, food, travelling etc. However investment does not mean an individual should have large amount of money. There are many products for low income earners (or any category of individual) to invest in India requiring less but continuous investment with decent return and that too at an absolutely zero risk.

Broadly we will classify these into two categories:

  1. Guaranteed returns and zero risk
  2. High returns and high risk

Considering conservative nature of such low salaried people, we’ll discuss about no-risk investment products, in this article.

Guaranteed Returns and Zero Risk:

Post office monthly savings scheme: Although it requires good amount of investment but the advantage is that an investor would earn monthly income till the tenure ends. For e.g. if a lower income earner invests Rs. 1, 00,000 in MIS for a tenure of 5 years, then he/she would receive monthly income of Rs. 683 and Rs. 1, 00, 000 as a maturity value. This scheme guarantees return and your money will be always safe. It is ideally suited for retired individuals.

Public Provident Fund: This is the most favorite investment product preferred by most of the Indians. A yearly investment of Rs. 1, 00,000 for the standard tenure of 15 years will earn maturity amount of 29.6 Lakh @ 8.1% interest rate. The minimum amount to be invested is Rs. 500 annually. Read more on personal loan for Rs.5000 earner.

Bank fixed deposit: FD is another safe product for conservative investor. And especially for individuals with low monthly income or self earners who do not want to take risk with their hard earned money, FD is a very good bet. Every bank offers different tenure starting from 7 days, 1 month, and one year as per the bank’s guidelines. If someone has accumulated e.g. Rs. 50, 000 and invests in FD for 1 year; then the maturity value @ 6.5% would be Rs. 53, 250 (compounded annually). Similarly for an investment of Rs. 25, 000; the maturity amount will be Rs. 26, 625. Check out credit card for low salaried individuals.

Sukanya Samriddhi Yojana (SSY): This was launched in January 2015 under the Beti Bachao Beti Padhao mission. Accounts can be opened only in the name of the girl child and is a very good return investment product. If a low income earner, deposits a fixed sum of money every month/year for 14 years (which is the standard tenure), then on maturity (i.e. after 21 years) the returns would be excellent. For e.g. an investment of Rs. 1000 & Rs. 2000 every month for a period of 14 years, the returns @ the current rate of 8.6% would be Rs. 5, 83,944 & Rs. 11, 73,887 respectively.

There is a minimum limit of Rs. 1000 that has to be deposited every year. So higher the amount poor salaried/earning person invests, greater would be returns, which are guaranteed and fixed with no risk at all. Compared to PPF, it gives higher returns and has become favorite since its launch. However account can be opened only for a girl child. Have a look how investing Rs. 50, 000 every year will give return of over 26, 00,000 (26 Lakhs).

National Savings Certificate: Similar to PPF and SSY, NSC also offers decent return @8% compounded every six month. Investing Rs. 1000 per month for a tenure of 5 years, will earn maturity value of Rs. 14, 802.

There are many other investment avenues but the ones listed above are recommended by experts and give higher returns.

As you can see above, all of the zero risk investments products require small amount of money to invest. When people earning less, start saving regularly and invest the same, they can create good corpus in the long run. This can help them at the time of need.

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Invest Rs. 2000 per Month & Earn 11.73 Lakh on Maturity, Zero Risk

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You must have heard the idiom – Penny penny makes many. Same phrase can be applied to investment which will earn you good returns. Regular investment for long term in a high return and/or guaranteed product, even for a small amount can create excellent amount of wealth for you.

Although many investors believe in short term gains over long term but any financial advisor you approach will always recommend to focus on long term investment. This is because the wealth created helps in securing financial future of you and your family.

In this article we will consider an example of investing 2000 every month and the estimated returns.

Now there are two types of investment products and we’ll explore both:

  1. High risk: Mutual funds, direct equity, & ELSS. These investments do not guarantee returns, however returns are very high compared to the below mentioned no risk products.
  2. Zero risk: PPF, Sukanya Samriddhi, FD, NPS, APY, endowment/money back insurance policies, recurring deposit

Mutual fund: For investors who do not have technical knowledge of equities/bonds etc. should opt for mutual fund route. These funds are managed by expert fund managers. Your only role is to invest and track the returns at a regular interval. Where to invest and when to exit is decided by the fund manager. In the last 5 years, mutual fund investment has given a return of over 15% which has beaten all other investment products available in the market. So if you invest Rs. 2000 per month (Rs. 24, 000 per year, total of Rs. 1, 20,000) for a period of 5 years in a top performing fund, the return would be nearly Rs. 1, 80,000. If the same amount is invested for a period of 10 years, the estimated returns would be above Rs. 5, 50, 000.

Direct Equity: This form of investment is recommended only for individuals with excellent knowledge of equities and having enough time to track the markets on a daily basis. In the last 20 years, Sensex has given 9 times return. So a monthly investment of Rs. 2000 for let’s say 10 years in a top performing stock can give you an excellent return. Condition is that you buy stock/s, at favorable amount and sell when it is at a peak. For e.g. if you buy 1000 shares @ Rs. 24 each and sell all of it @Rs. 30 each, then your profit will be nearly Rs. 5998 i.e a profit of 24.99%.

Equity Linked Savings Scheme (ELSS): This variant of mutual fund also carries risks as the money is majorly invested in equities and moreover it has a lock-in period of 3 years. The past performance of ELSS funds has given average return of 15%-25%. So if someone invests Rs. 1000 in a top performing tax saver ELSS fund (Rs. 72, 000), the estimated returns would be greater than 85000, which is nearly a 18% increase.

There are other high risk products which we will not cover in this article as the returns from them are low compared to the above mentioned products in addition to the high risks involved. These products are corporate fixed deposits, ULIPs and gold. Real estate is also one of the high return on investment product after mutual fund/equity. However, investor needs to put in lakhs of rupees as an initial investment in order to get good return and is certainly not possible for a poor income earning individual. Read more on Pradhan Mantri Awas Yojana, a government scheme which offers housing to poor earners.

Next we’ll look into zero risk investment products and calculate returns for invested sum of Rs. 2000 every month for a fixed period as per the products standard tenure.

Sukanya Samriddhi Yojana: This has turned out to be the best investment product which was launched in the year 2015. The product carries absolutely no risk and the returns too are significant. Remember that, investor can invest in SSY only if he/she has a girl child. Read more on detailed features of SSY. This scheme is not applicable for someone having a boy. The interest rates are revised every year and for FY 2016-2017 the interest offered is 8.6% compounded annually. If someone invests Rs. 2000 every month (i.e. 24, 000/Year) for a period of 14 years, then the returns after 21 years which is the maturity period will be Rs. 11.73 Lacs.

Bank Fixed Deposit: This zero risk product offers guaranteed returns and has been a preferred by investors over savings account interest. Every bank offers varying interest rates but the average is between 6%-8%. If someone puts in Rs. 1, 20,000 in FD account for a period of 5 years, then the maturity value would be around Rs. 1.75 Lacs assuming 7.5% interest rate offered.

Public Provident Fund: When you ask your parents, the most recommended product carrying no risk at all, then the answer will be PPF. Investment of Rs. 3, 60,000 (i.e. Rs.2000/month) for a standard lock-in period of 15 years will give a return amount of 7.1 Lakh @8.1% interest rate.

Savings Bank Account: Banks in India offers interest rate of 4%-6% for the money kept in a regular savings account. So Rs. 24, 000 deposited for a period of 1 year will give return of Rs. 24, 960; assuming interest rate of 4%. And when kept for 3 years, the maturity amount will be Rs. 26, 660. So as you can see compared to bank FD, savings account offers very less returns.

National Savings Certificate: This small savings scheme offers deposits in the range of Rs. 100, 500, 5000 and 10000. So you can purchase 4 certificates of Rs. 500 each i.e. Rs. 2000. The maturity amount will be Rs. 3032 @ interest rate of 8.5% for a 5 year tenure.

Recurring Deposit: Another preferred product especially by investors who do not want to take risk. If you want to develop a habit of savings then recurring deposit is worth recommended. A monthly installment made for Rs. 2000 for 12 months will give a return of nearly Rs. 25,000. assuming annual interest rate of 7%. Investors can open RD account in any nationalized/private sector bank such as SBI, Axis, ICICI, HDFC, Bank of India, and others. Depending on the tenure banks offer varying rates but are in the range of 7%-8%.

There are other zero risk products such as money back policies, pension plans and others. But their main objective is to cover life.

Here’s the table showing returns generated after investing Rs. 2000 per month in the above mentioned products. It is assumed that investor does not withdraw money prematurely or miss any periodic payment. Interest rates are assumed depending on the past performance or the standard rates offered for the respective product.

Investment ProductInterest/Growth % AssumedTotal Invested Amount (Rs. 2000 per Month)
Tenure (in Years)Maturity AmountRisk Involved
Mutual Fund
15%
2,40,000
5
5.5 Lakh
Yes
Direct Equity
25% (This is profit %)
24,000
NA30,000
Yes
Equity Linked Savings Scheme (ELSS)18%
72,000
3
85,000
Yes
Sukanya Samriddhi Yojana8.60%
3,36,000
14
11.73 Lakh
No
National Savings Certificate
8.50%
200053032No
Savings Account
4%
24,000
124,960
No
Public Provident Fund
8.10%
3,60,000
15
7.1 Lakh
No
Bank Fixed Deposit
7.50%
1,20,000
5
1.75 Lakh
No
Recurring Deposit
7%
24,000
125,000
No

So as you can see Indian investment market is flooded with range of products. And investing in best product keeping in mind the financial goal should be your prime focus.

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Wealth Creating Insurance Policies: Endowment, MoneyBack & ULIP

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It’s a myth that life insurance policy’s sole purpose is to pay up in an event of the death or when the policy matures. However very few amongst us, know the fact that life insurance policies are flexibile too. i.e. they serve dual purpose – providing life cover and give returns. So investors get combined benefits of protection, saving and investment in order to meet their varying financial requirement and at the same time offering ample opportunity for wealth creation.

Such policies that offer savings and investment options are known as endowment plans and ULIPs. And the most popular variant of the endowment plan is the money back policy. In this policy, investor gets pre-defined set of money at pre-fixed interval.

Let’s get into detail of such policies.

Endowment Policies:

The dictionary meaning of endowment is gift in the form of money. These life insurance plans are designed to pay a lump sum after specified number of years – which could be due to the policy holder’s death or when the policy matures. Typical endowment plans are for long term ranging from 10, 15, and 20 years or may be more than that.

The basic objective of long duration policies offering lump sum amount of money, is to meet the financial goals like child’s marriage or education. But some people also buy them to create own’s retirement corpus. In addition to this, some endowment plans also provide yearly bonus. So at the end of policy term, both the sum assured and bonus are paid out. Endowment plans are best recommended to risk averse investors wanting to generate moderate amount of wealth which is 100% tax free. Read zero risk, high return investment options in India.

Money Back Policies:

This is again a type of endowment plan. And the sole purpose of this policy is to create wealth for the policy holder and distribute it during the tenure of the policy. In addition to this, life is covered during the term of the policy and the maturity benefits are paid at regular intervals i.e. survival benefits are paid out in 5 year interval. So someone buying a policy for 20 years, will get survival benefits in 5th, 10th, & 15th year which is X% percent of the sum assured. And at the end of 20th year, Y% percent of sum assured, which is greater than X% with accrued bonus will be paid.

Unit Linked Insurance Policies:

These policies also have two main purposes: secure life and create wealth. In ULIPs, certain part of premium paid is dedicatedly used for providing life cover to the policy holder and the remaining premium amount is invested in equity, debt or both. This assigning of common pool of money is called as fund. The only risk associated with ULIP is the investment done in equity and debt which are linked to market. So fund performance essentially is the deciding factor for building wealth. But at the same time, investors are given a choice to switch between different funds and maximize wealth creation.

Here are some of the best wealth creating policies out in the market:

Endowment PolicyMoney Back PolicyULIP
Endowment Assurance by LICLIC Money Back PolicySBI Life Wealth Assure
Savings Suraksha by ICICI PrudentialSBI Life Smart Money Back GoldMAX Life Fast Track Growth Fund
Life Samriddhi by Bharti AXABajaj Allianz Cash AssureHDFC Life Click2Invest
MetLife Endowment Savings Plan by PNB MetLifeHDFC Life Super Income PlanICICI Pru Wealth Builder
Premier Endowment Plan by Kotak Life InsuranceReliance Life Super Income PlanICICI Pru Guaranteed Wealth Protector
Reliance Life Endowment Plan by RelianceAegon Life Regular Money Back InsurancePNB MetLife Smart Platinum
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Invest Rs.1000 in Domain Name & Earn Over Lakhs/Crores

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The subject line of this post looks fishy or gimmick. But trust me, its not. Ever imagined any investment less than a Rs. 100 can fetch you over thousands, lakhs or even more?

Years back your grandfather must have purchased house/land for some 100 or thousand rupee whose worth today might be in Crores. But buying same piece of property today at the same price is IMPOSSIBLE. Real estate as an investment product, is now only for riches whether it is buying a property in a metro or tier-II cities.

So how can you still invest small and get excellent returns which are worth in thousands or lakhs. This is possible through domain investing, a very common type of investment in a technical industry. It is an investment type where you can invest money in buying a website domain name (for e.g. hotels.com or diamonds.club).

Now look at below mentioned domain names and the price which they were sold for:

Domain NamePrice Sold At (in Dollars)Equivalent INR
hotels.com11 Million73 Crores
internet.com18 Million120 Crores
privatejet.com30 Million201 Crores
FB.com (Purchased by Facebook)8.5 Million57 Crores
Business.com7.5 Million50 Crores
Toys.com5.1 Million34 Crores
English.club17, 50011.75 Lakhs
Diamonds.club82485.5 Lakhs
S.club37, 98426 Lakhs

Whoever were owner of these domains, must have purchased them at a fraction of cost. And after holding for few months/years, they sold at above mentioned whopping sum. The returns would surely incomparable to any form of investments today.

How much does it cost to buy a domain name?

Two factors play a very important role in domain buying – name of the domain and the cctld (country code top level domain). Higher the demand for the name and cctld, higher would be the price for which it would be sold. But note that it’s very difficult to find such domains because they are unavailable or already purchased by someone else.

According to the domain experts, following TLDs are always high in demand:

  • .com
  • .net
  • .guru
  • .club
  • .live
  • .xyz

And better the name of the domain (i.e. with a high demand) e.g. hotels, london, dollars etc., greater would be its monetary value.

Where to purchase domains from:

There are many online companies’ websites you can purchase and put your domains for auctioning i.e. selling. Prominent and trusted companies across the world are:

  1. GoDaddy (Also provides auctioning service)
  2. Sedo (It’s a domain marketplace i.e. you can only sell/purchase)
  3. Google Domains (You can only buy domain name)
  4. Dreamhost (You can only buy domain name)
  5. Flippa (It’s a domain marketplace i.e. you can only sell/purchase)

If you visit GoDaddy website (https://in.godaddy.com/) and search for insurance.xyz then the selling price is Rs. 44 Lakhs, dollars.xyz is available at Rs. 20 Lakhs and so on.

Are such worthy domains available easily in the domain marketplace?

Answer is No. But there are many untapped domain names which you can search, buy and put for selling.

How many domains should be purchased?

There’s no definite number. What matters is the name and TLD. Quality domains will sell the most and early. It’s like a real estate. Best one would fetch you the most money.

How much time it takes to sell a domain?

Again there is no definite answer to this. If the domain is good, you can even sell it within a week.

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