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S.No. Investment Tenure ExpectedReturn

TaxApplicability

Comments

1 Bank FixedDeposits

Few days toseveral years

Usually over8%

Taxable attheinvestors

slab

Bank failures are rare in Indiaso bank fixed deposits are avery safe way to invest your

money.You know the rates upfront so there is no uncertaintythere.Taxes can eat into yourreturns though, especially ifyou are in the high tax bracket,but even then a FD thatcompounds quarterly and isdone for a long maturity willyield well.Here is a link to apost which has the list of someof thebest bank fixed

depositsthat are available inIndia right now.

2 Tax SaverBank FixedDeposits

5 years ormore

Usually over8.5%

The amountthat youinvest in taxsaver FD isdeductiblefrom yourtaxableincome up toa limit of Rs.

1 lakh under80C. Theinterestincome itselfis taxable.

Like the bank fixed deposit,this is also a very safe andcertain investment.Thedrawback is that money islocked in for at least 5 years,and the positive is that you getsome tax benefit to juice upyour return.Here is a link tosome of thebest tax saver

fixed depositsavailable inIndia right now.

3 PublicProvidentFund

15 years 8.8% The amountyou invest iseligible for80Cdeductionsand the

returns aretax free too.

This is also a very safeinvestment, and the returns arespectacular, specially forsomeone in the 30% taxbracket.If you dont mind the

15 year wait period then no

other fixed income investmentcan match the PPF return forthe safety it offers.

4 NSC IX Issue 10 years 8.9% Interestincome istaxable.

This is another safeinvestment with decentreturns.Here is a post withthisand other post office schemedetails.

http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2012/07/04/post-office-schemes-departure-of-kvp-introduction-of-nsc-ii-other-recent-changes/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2011/01/19/tax-saver-fixed-deposits-with-high-interest-rates/http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/http://www.onemint.com/2011/01/14/banks-with-high-interest-rates-on-fixed-deposits/

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5 SeniorCitizensSavingsScheme

5 years 9.3% Interest istaxable,investmentamount iseligible for

80Cdeduction.

A lot of readers havecommented here over theyears about how useful theSCSS is along with themonthly income scheme of the

post office for their parents,and relatives and this is a goodoption as well.Here is a link toanimagethat has the interestrates for this and comparisonwith other similar instruments.

6 MonthlyIncomeScheme

5 years 8.5% Interestincome istaxable

This is useful if you arelooking for an instrument thatgives you a monthlyincome.Here is link to a postaboutMIS.

7 Tax FreeBonds

They trade onthe stockexchange soyou can buyor sell anytime.

Usuallyupwards of 8%

Income istax free

I would say that these bondsarent as safe as a bank depositor a post office deposit butthey can still be categorized asfairly secure instruments.Ifyou buy these bonds from thestock market right now, theyare trading at higher than theirface value so your effectiveyield will be less but thenthere is always a chance to

make capital gains if interestrates come down.Here is agood link on the NSE websitethat hasquotes of all thesebonds.

8 FixedMaturityPlans

1 year ormore

Not fixed butusuallycomparable tofixed deposits

This is taxefficientwhencomparedwith FDs.Read more

for details.

Although these are fixedincome instruments, there isabsolutely no guarantee orindication of what the returnswill be like.To that extent,they are very different from

the other instrumentsmentioned in this list.Eventhen, they are speciallyattractive to people in thehigher tax bracket due to theireventual FD like returns andtax advantage.Read moreaboutFMPs here.

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9 Debt mutualfunds

Varyingmaturitiesand can bebought andsold anytime.

Not fixed. Tax oncapital gainsanddividends.

These are like FMPs in thesense that the returns are notfixed, so they are not meantfor you if you cant handle the

uncertainty.Their popularity

stems from the fact that theyare flexible to buy and sell andhave given decent returns inthe past.

10 CorporateNCDs

Varyingmaturities

Higher thanfixed deposits.

Interest ischargedaccording toyour slaband capitalgains arealso

applicable.

These are higher riskcompared with the otherinstruments mentioned in thislist, especially if you invest ina NCD of a company whichdoesnt have robust

finances.The higher risk

means that their return ishigher as well and they can beused to juice up your fixedincome portfolio but you needto be careful while buyingthem.This post about6 thingsto keep in mind whileinvesting in company NCDsisa good way to get started onthis topic.

11 Savings

Account

No Maturity 47% Interest is

tax free upto Rs.10,000 andthen chargedaccording toyour slab.

A reasonable place to keep

your short term funds, but ifyou have a lot of money in asavings account then you needto consider a FD or some otherinstrument that can yieldhigher.

All these options are widely known and based on what you want to do and what the rest of yourportfolio looks like, you can pick and choose one or more for safety and reasonable returns.

Top Investment Options

While some plans accrue short term profits some are long term deposits. The first step towardsinvesting in Indian market is to evaluate individual requirements for cash, competence toundertake involved risks and the amount of returns that the investor is expecting. Below are Top10 Investment Options in India which assure safe and satisfactory returns.

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1. Investments in Bank Fixed Deposits (FD)Fixed Deposit or FD is accrues 9.25% of annual returns for non-senior citizen, dependingon the bank's tenure and guidelines, which makes it's widely sought after and safeinvestment alternative. The minimum tenure of FD is 15 days and maximum tenure is 5years and above. Senior citizens are entitled for exclusive rate of interest on Fixed

Deposits, current rate of return is average 10% annual.

2. Investments in Insurance policiesInsurance features among the best investment alternative as it offers services toindemnify your life, assets and money besides providing satisfactory and risk free profits.Indian Insurance Market offers various investment options with reasonably pricedpremium. Some of the popular Insurance policies in India are Home Insurance policies,Life Insurance policies, Health Insurance policies and Car Insurance policies.

Some top Insurance firm in India under whom you can buy insurance scheme are LIC,SBI Life, ICICI Prudential, Bajaj Allianz, Birla Sunlife, HDFC Standard Life, RelianceLife, Max NewYork Life, Metlife, Tata AIG, Kotak Mahindra Life, ING Life Insurance,etc.

3. Investments in National Saving Certificate (NSC)National Saving Certificate (NSC) is subsidized and supported by government of India asis a secure investment technique with a lock in tenure of 6 years. There is no utmost limitin this investment option while the highest amount is estimated as ` 100. The investor is

entitled for the calculated interest of 8% which is forfeited two times in a year. NationalSaving Certificate falls under Section 80C of IT Act and the profit accrued by theinvestor stands valid for tax deduction up to ` 1, 00,000.

4. Investments in Public Provident Fund (PPF)Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. Aninvestment of minimum ` 500 and maximum INR. 100,000 is required to be deposited ina fiscal year. The prospective investor can create it PPF account in a GPO or head postoffice or in any sub-divisions of the nationalized bank.

PPF also falls under Section 80C of IT Act so investors could gain income tax deductionof up to ` 1, 00,000. The rate of interest of PPF is evaluated yearly with a lock in tenureof maximum 15 years. The basic rate of interest in PPF is 8%.

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5. Investments in Stock MarketIndian Stock market is very fluctuating. A smart portfolio positioned for long-termgrowth includes strong stocks from different industries. Before investing in stock marketone should be prepared to assume risk equivalent to sum invested in the market. Investingin share market yields higher profits. Influenced by unanticipated turn of market events,

stock market to some extent cannot be considered as the safest investment options.However, to accrue higher gains, an investor must update himself on the recent stockmarket news and events.

6. Investments in Mutual FundsMutual Fund firms accumulate cash from willing investors and invest it in share market.Like stock market, mutual fund investment are also entitled for various market risks butwith a fair share of profits. One should select mutual fund schemes based on all or someof the following criteria:

Long term and Short Term PerformanceConsistency in ReturnsPerformance during bullish and bearish phasesFund Managers performance with the fund's operations

A simple way to select a mutual fund scheme to invest in is to select a 5 star or 4 starrated fund from one of the following rating agencies:

ICRA RatingsValue Research OnlineMoneycontrol

7. Investments in Gold Deposit SchemeControlled by SBI, Gold Deposit Scheme was instigated in the year 1999. Investments inthis scheme are open for trusts, firms and HUFs with no specific upper limit. The investorcan deposit invest minimum of 200 gm in exchange for gold bonds holding a tariff freerate of interest of 3% - 4% on the basis of the period of the bond varying with a lock inperiod of 3 to 7 years.

Moreover, Gold bonds are not entitled of capital gains tax and wealth tariff. The suminsured can be accrued back in cash or gold, as per the investor's preference.

8. Investments in Real EstateIndian real estate industry has huge prospects in sectors like commercial, housing,hospitality, retail, manufacturing, healthcare etc. Calculated realty demand for IT/ITESindustry in 2010 is estimated at 150mn sq.ft. around the chief Indian cities. Termed as the"money making industry", realty sector of India promises annual profits of 30% to 100%through real estate investments.

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9. Investments in EquityPrivate equity is a type of asset consisting of equity securities in private companies thatare not publicly traded on stock exchange.

A private equity investment will generally be made by a private equity firm, a venturecapital firm or an angel investor.

Private Equity is expanding at a fast pace. India acquired US $13.5 billion in 2008 underequity shares and featured among the top 7 nations in the world. In 2010, the total equityinvestment is predicted to increase upto USD 20 billion. Indian equities promisesatisfactory returns and have more than 365 equity investments firms functioning underit.

As ranked by the PEI 300, the 10 largest private equity firms in the world are:

1.TPG Capital2.Goldman Sachs Principal Investment Area3.The Carlyle Group4.Kohlberg Kravis Roberts5.The Blackstone Group6.Apollo Global Management7.Bain Capital8.CVC Capital Partners9.First Reserve Corporation10.Hellman & Friedman

10.Investments in Non Resident Ordinary (NRO) fundsInvesting in domestic (NRO) is one of the best investment alternatives for NRIs whowish to deposit their income accrued abroad and maintain it in Indian rupees. Thedeposited amount along with the interest is completely repatriable. Investment can bedone in Indian financial institutions including the Non Banking Finance Companieswhich are listed with RBI. The interest returns accrued on in this account is entitled underIT Act and is subject to 30% tax reduction at source including the appropriate surchargeand education cess. The NRI investor can repatriate upto USD 1 million every year, forgenuine reasons, by forfeiting valid tariffs.

- See more at: http://business.mapsofindia.com/investment-industry/top-10-investment-options.html#sthash.vtZITRi8.dpuf

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How to Minimize Risks in investment

In Today's dynamic economy, a great number of individuals want to use their money to generate income

or profit by investing into different activities. But most of these people do not know how to invest

wisely; as a result they lose their hard earned money badly.

As every investment involves risk, it is important to learn techniques and strategies that minimize the

risk associated with investment. The most effective way of minimizing the risk is diversification.

Diversification involves spreading your portfolio over well researched investment opportunities.

There are different ways to diversify your portfolio: Diversify among asset class, Diversify globally,

diversify by sector and Diversify by style.

Here is how to diversify your portfolio among three asset classes:

1.Investing in Stock Markets

Stock market involves buying shares in a particular company. When you buy a share, you become a

share holder of the company. If the company gets high earning, you receive cash dividends proportional

to your initial investment. If the company suffers loses during a year, you may not receive any profit. At

the same time, if the company decides to expand its business with its profit, there is a possibility that

you may not get your profit for that period.

The best way to invest in stock markets is through Brokerage Company. You pay the purchase of the

shares and the commission for the broker's services. Brokers can also sell your stock shares if you are

willing to sell your stock.

You can earn large profits over a long period of time. But it involves a risk. Stock values change

continually and often very large. As a result you do not have assurance that you will get back your initial

investment. A business recession or poor company management may reduce the company earning

power. As a result people may not show interest to buy stocks from the company. At this moment, your

share value may drop, and if you decide to sell your stock there is a probability of lose.

One way of minimizing risk is buying combination of stocks from different industries. Always avoid

investing in single stock.

2.Bonds

Bonds are less volatile as compared to stocks, mostly they provide regular income. If your are more

concerned with safety of your investment, it is recommended to allocate more of your portfolio towards

US government or insured bond investment rather than stocks.

3.Short Term investment

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Short term investment includes money market accounts and Certificate of Deposit. Compared to Stock

markets and bonds, they yield small profits. They may also provide little protection against rapid

inflation. But these kinds of investments usually offer insured principal.

To summarize, to minimize the risks associated with investment, you should always diversify your

portfolio over well researched asset class. It is also important to diversify with in each asset class. Be

advised that: the safest investments with the lowest returns are government bonds and certificate of

deposits.

An entrepreneur must assume the possibility of certain risks which are inherent in any form of

business organisation. Such risks can be handled through proper planning and adopting two possible

strategies. These are:-

Shifting the risks to the people who are skilled in managing them and are willing tobear them. The risks may be transferred or shifted through:-

Hedging:-It is a method of risk transfer accomplished by buying and selling for futuredelivery. It is a form of forward trading to minimise losses due to changes in prices.

Under it, the possibility of loss which occurs because of price fluctuations, is shifted

during the time gap between purchase and sale of a commodity. It involves entering

simultaneously into two contracts of an opposite though corresponding nature, one in

the spot or cash market and the other in the future market. The purpose of hedging is to

protect the trade profit from adverse fluctuations in commodity prices.

Underwriting:-A public company issuing shares and debentures may face the risk of lossdue to the failure to sell the entire issue of securities. Such risk can be shifted to anunderwriter which is the financial intermediary between the company issuing securities

and the ultimate investors. It provides several benefits to a company:-

o It relieves the company of the risk and uncertainty of marketing the securities.o Underwriters have an intimate and specialised knowledge of the capital market.

They offer valuable advice to the issuing company in the preparation of the

prospectus, time of floatation and the price of securities, etc. They also provide

publicity service to the companies which have entered into underwritingagreements with them.

o It helps in financing of new enterprises and in the expansion of the existingprojects.

o It builds up investors' confidence in the issue of securities. The association ofwell-known underwriters lends prestige to the company and the investors feel

that the issue is sound enough for profitable investment. Also, the securities

underwritten by reputed underwriters receives better response from the public.

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o The issuing company is assured of the availability of funds. Important projectsare not delayed for want of funds.

o It facilitates the geographical dispersal of securities because generally, theunderwriters maintain contacts with investors throughout the country.

For more details visit our Section on 'Underwriting'

Subcontracting:- is an inter-firm relationship, where a small firm may produce differentcomponents, intermediate inputs and final output or it may provide various assembling

activities, etc for the parent firm. Such small firms are generally known as the

subcontractors. The need for subcontracting arises when a firm undertakes a business

which extends over a long period of time or which requires the specialised services of

several experts. In such a situation, the firm may face risks resulting from rise in prices

of materials, labour or other imports. Such risks may be shifted to other firms through

subcontracting. For instance, a building construction firm may engage subcontractors

for timbers, glasses, electric wiring, plumbing, cement, etc.

Sharing the risks with other people so as to minimise the burden on the firm. Generally poolingof the investment of a large number of persons into the organisations helps in spreading the

risks over a large number of shareholders. However, insurance is the most important and

prevalent device for risk sharing.

'Insurance' may be defined as a contract in writing under which one party agrees toindemnify the other party against a loss or damage suffered by it on account of anuncertain future, in return for a consideration called 'premium'. The person/business whogets its life/property insured is called 'Insured/Assured'. The agency which helps in

entering into an insurance arrangement is called 'Insurer' or 'Insurance company'. Theagreement or contract which is put in writing, is called a 'policy'. An insurance policyprovides the following benefits to a business concern :-

Protection :- it provides protection against risk of loss and a sense of security to thebusinessmen.

Diffusion of risks :- as the burden of loss is spread over a large number of people. Credit standing :- of the firm is enhanced as the businessman can easily transfer some

of his risks to an insurance company.

Continuity and certainty of business :- if all the risks were to be borne by thebusinessmen themselves, the business operations would have been uncertain and

halting in character. Better utilisation of the capital of the firms :- as the Insurance companies take over the

risk, it enables the business firm to invest and optimally utilise its capital.

http://business.gov.in/growing_business/underwriting.phphttp://business.gov.in/growing_business/underwriting.phphttp://business.gov.in/growing_business/underwriting.phphttp://business.gov.in/growing_business/underwriting.php