Fixed maturity plan to set the goal:
The returns earned from FMPs longer than three years are treated as long-term capital gains. Investment in FMP could be done only during the new fund offer. On the other hand, the interest earned on fixed deposits is added to the income and taxed at normal rates, It is a special class close-ended debt.
Fixed Maturity Plans are becoming the latest alternative investment options to conventional fixed deposits as per their return, and tax benefit is considered. The fund manager of FMP follows the way of buy and hold strategy. Buying and selling of debt securities are not so frequent like others. Both require you to stay invested for a fixed duration. Both FD and FMP gives return as per the customer requirement.
Many plans are rolling in the market for tax benefit facilities. A person may choose the option for dividend or growth in them. Also, someone may look for a regular income, although not assured to a particular sum. Public Provident Fund (PPF) Scheme has been a well-recognized savings venture for several investors and is still standing on the top.
As the principal and the interest earned have a security guarantee and the returns are tax-free. While the minimum amount required annually to keep the account active is Rs 500, Rs. 1.5 lakh is what you can deposit in the account at maximum. This is the combined limit, which is set for self and minor account. PPF is the best suitable one for those who do not want any problem in returns and aim for a secure return.
A term insurance plan is important because even financial consultants suggest taking a life cover even before investing in long-term goals. If the bread earner of the demise could give a backup for lifelong to the family, considering it should be of the right amount.
There is a misconception that insurance is beneficial only for married people. In fact, life insurance or term insurance is a necessity for anyone who has financial dependents. The misconception of insurance should be cleared as a person could also have old parents as a dependant, which also needs to get security.
Having a cover for life long may not be enough for a person. An accident can turn a policyholder disabled, thus impacting his or her earning capacity. Failure to make timely premium payments towards the policy may result in failure to achieve the policy's benefits. The next important factor is to fix the tenure.
The tenure offers terms up to 35 or even 40 years. Longer tenure means higher premiums and benefits. Insuring an amount for a more extended period may not be required for a person because, in maximum cases, liabilities are considered to be completed within the retirement. The people need to get happiness and benefit from the money earned in their lifetime after that.
Considering buying a protection plan, before that, make sure you have the benefits linked with a critical illness or a disease-specific idea such as a cancer cover. Taking the decision to buy life insurance only to save tax could be a financially damaging decision. Instead, a person should consider putting the savings in the Public Provident Fund, which could give a better return with tax-free income.
Sukanya Samriddhi Yojana (SSY) is a deposit scheme for the girl child. It is a part of the 'Beti Bachao Beti Padhao' campaign by the Government of India. The initiative is really appreciable to save the girl child in the nation. This small deposit scheme is giving a good return indeed with an 8.4% rate of interest. It requires a small amount of 250/- for the scheme and will also provide the taxpayers' tax benefit. The entire amount will get mature when a girl turns to 18 years. The maturity amount is also non-taxable. It is quite an essential initiative in the financial ground by the government.