What are the best investment products in India?

When it comes to investing funds to build a corpus, there is a fair bit of confusion among people with regards to the best investment options in India. There are several different investments, each with a different return. However, the best investments are those that provide inflation beating returns consistently over the long run and manage to also save tax.

Here is a list of best investment products in India:

1. Mutual funds:
This includes both equity mutual funds and debt mutual funds. Debt mutual funds have a fixed and guaranteed return and are a great avenue to park funds for the short term. Since it is a mutual fund, the money is liquid and can be converted to cash at any point of time. Equity mutual funds grow based on the market movements. However, they are the best tool to grow capital in the long run. Investing in special tax saver mutual funds gives a deduction under Section 80C of the Income Tax Act up to Rs. 1,50,000.

Investing in mutual funds is the best option for people who want to enter the market but don’t have the right expertise. Mutual funds are professionally managed and an investor can take advantage of the fund manager’s expertise while making his investment.

2. Equity shares:
Equity shares are units of capital issued by a company. Investing in equity shares, especially in reputed companies can be an excellent strategy to grow your capital. Investing in equity shares also gives a return in the form of dividends which are tax free. Equity shares can be purchased from the secondary market or via an Initial Public Offer (IPO) which is the first time a company issues shares to the public.

3. Saving Bonds:
These are bonds issued by the Government of India. They come with a  coupon rate of 7.75%. Since they are issued by the Government, they are a risk free investment option. The interest on these bonds is taxable.

4. Capital Gains Bonds:
These are bonds issued by the National Highways Association of India (NHAI) or the Rural Electrification Corporation (REC). These bonds are excellent for investment to reduce the capital gains tax on transfer of assets. However, from AY 20-21 or FY 19-20, this deduction is available only to people who transfer houses or plots of land. No other asset transfer will be allowed for taking an exemption.

5. Inflation indexed securities:
These securities are issued by the Reserve Bank of India. The coupon rate on these investments is 1.5% more than the consumer price index. This investment is only available for retail investors. These securities are only available via SBI, HDFC Bank, ICICI Bank and Axis Bank.

It is possible to make an online investment to invest in any of these products. To make an investment, the first step is to open a demat and trading account with a reputed company. The best way to ensure you grow your capital to meet your targets and goals is to avail professional investment services of a financial planner. This way, your capital will be managed professionally and you can ensure it is deployed in the best investment options in India to meet your goals.

How is health insurance beneficial?

The cost of getting good quality medical treatment in India keeps rising with each passing year. The sedentary lifestyle among most of the people in the country has also given rise to lifestyle diseases. In most cases, medical treatment for illnesses leaves people’s savings significantly depleted, which then affects future savings and investments.

When it comes to India, buying life insurance to cover the life of an individual is common. However, the awareness and penetration of health insurance are woefully inadequate. Health insurance in India is not considered a necessity but often overlooked as something that is merely an expense that does not give any return. 

What is health insurance?

A health insurance policy covers the insured against the cost of medical treatment. Different health insurance plans include a different type of medications, for example, a critical illness health insurance plan will cover treatment for the specified critical illnesses. A cancer health insurance plan will reimburse the insured for spends made for cancer treatments. 

A health insurance policy can either be a mediclaim policy, which covers the cost of hospitalisation only or a broader health insurance policy which includes pre and post hospitalisation expenses, medical consultation expenses, day care procedures etc. 

The basis of health insurance plans is reimbursement of medical treatment spends. The nature of spends that are reimbursed and the percentages of spends depends on the health insurance policy. Health insurance plans have a sum assured up to which reimbursement of expenses is done.

How is health insurance beneficial?

1. Protects savings:
One of the best advantages of health insurance is that it protects a family’s savings. In the absence of health insurance, the cost of medical treatment would have been met out of the family’s savings. With a health insurance policy, several of the medical treatment costs are met by the insurance company.

2. Covers other expenses:
Depending on the plan, the health insurance policy can cover different types of costs apart from hospitalisation spends. Some of these expenses are:
• Ambulance charges
• Diagnosis spends
• Consultation spends
• The second opinion spends
• Repatriation of remains
• Ayurveda/Unani/Homeopathy treatments
• Organ donor expenses
• Hospital cash allowance
• Home nursing allowance
• Physiotherapy spends

3. Cashless treatment:
Most insurance companies tie up with hospitals to provide cashless treatment. In cashless treatment, the insurance company directly pays the hospital the sum required for treatment. It saves a lot of effort and time for the patient and his family.

4. Can insure family together:
It is possible to take a family floater health insurance policy to cover the entire family. This reduces the hassles of buying individual policies and also ends up being cheaper depending on the number of people insured.

5. Income tax deduction:
Buying health insurance plans can give you an income tax deduction under Section 80D of the Income Tax Act. The deduction is Rs. 30,000 for insurance policies for self, spouse, and dependent children and it goes up to Rs. 50,000 for senior citizen parents, or senior citizen policyholder.

What is the Sukanya Samriddhi Account?

The Sukanya Samriddhi Account is a Government-backed savings scheme, especially for the girl child. This scheme allows the parent or the guardian to build a fund for the girl child, which can be used once she reaches 21 years of age. 

Under the Sukanya Samriddhi scheme, an account is opened in the name of the girl child with a deposit that has to be made every year. The interest earned on the Sukanya Samriddhi account is the highest among all the small saving schemes of the Government. Currently, the account earns interest at 8.6% for the year 2018-19, with interest compounded on an annual basis. 

Features of the Sukanya Samriddhi account scheme:

• The account can be opened for a maximum of two girl children except in case twins or triplets are born.
• The account has to be opened from the time the girl child is born till the time she reaches 10 years of age. The Sukanya Samriddhi account cannot be opened once the girl child crosses 10 years of age.
• The minimum contribution per year is Rs. 250 whereas the maximum contribution is Rs. 1.5 lakhs. The first deposit is a minimum of Rs. 1,000
• There is a deduction available for contributions made to this account under Section 80C up to Rs. 1.5 lakhs.
• The maximum duration for which payments need to be made in the account is 14 years. After that, no more contributions are required till the account matures. The account keeps earning interest on the accumulated balance till then.
• A Sukanya Samriddhi account matures when the girl child reaches 21 years of age.
• The interest earned on Sukanya Samriddhi scheme is exempt from Income Tax. The withdrawal from this scheme on maturity is also exempt.
• This scheme is available only for resident girl children. Non-resident girl children cannot have this account opened in their name even if their parents are Indian residents. If the residential status of a girl changes, then the parents have to inform the bank within a period of the 1-month following which the account will be closed.

Documents required to open a Sukanya Samriddhi account:

• Birth certificate of the girl child
• Identity and address proof for the parents or legal guardian
• Photographs of the girl child and the parents or legal guardians
• For an adopted child, the parents will have to give a certificate explaining the relationship between the parent and the child.

The Sukanya Samriddhi scheme is a beneficial scheme that provides a way to build a corpus for the girl child’s education and wedding expenses.

Debit card: Top 5 reasons to get a debit card now

It is a type of card that is similar to carrying cash. While using a debit card for payments, the amount automatically gets deducted from your bank account. Usually banks issue ATM cards that also function as debit cards.

The card is linked to your account. Debit cards in India are usually issued by Visa, MasterCard or the local RuPay. Just like a credit card, a debit card also has a 16 digit number and a CVV. Debit cards function on a PIN that has to be set by the debit card holder. Some banks allow debit cardholders the flexibility to choose their limits for transactions. Debit card holders are intimated about their spends via SMS generally. The current debit cards come with chip-based security. Some banks also give free insurance cover if the cardholder incurs a particular amount of spends each month.

A debit card is a useful card to have. Here are the top 5 reasons to get a debit card now:

1. Convenience:
One of the best reasons to get a debit card is the convenience it gives. Debit cards also function as an ATM card. There's no need to carry any cash because the debit card can be used to withdraw some money as well from ATMs.

2. Cashback points:
Credit cards earn points, but debit cards earn cashback points which can be redeemed for cash back in the bank account. Each debit card has a specific lisft of transactions that give cashback points.

3. Chip protection for added safety:
With the new rules for debit cards in place, the old magnetic strip cards have been discontinued and replaced by chip security cards. These cards compulsorily have the chip verification system, which is inherently more secure.

4. Offers and discounts:
A debit card holder can get several discounts on a range of items such as utility bill payments, airline ticket bookings etc. These discounts depend on the type of online debit card that the holder applies for.

5. Can be used for international transactions:
An international debit card is a debit card that can be used to make purchases on foreign websites. The debit card will use either a pin based verification or an OTP based verification to authenticate the transaction. Note, the debit card can be used on international websites. It may not necessarily work outside the country.

Benefits of buying two-wheeler insurance

A two-wheeler is a particular part of the rider's life. Given the often-poor road conditions in India, and the number of risky drivers, there is a high chance of any damage to the two-wheeler. One of the ways to protect the two-wheeler and to prolong its life is to cover it with two-wheeler insurance.

Two-wheeler insurance is insurance that covers the risk of damage to the vehicle, as well as the loss to the rider due to any unforeseen event. It usually includes the risk of injury in case of:

• Accidents
• Bike theft
• Natural or human-made disasters

Two-wheeler insurance also covers third party liability, which is the risk that the rider of the two-wheeler will cause any damage to a third party. In India, having a two-wheeler insurance policy is mandatory. 

There are two types of two-wheeler insurance:

• A comprehensive policy that covers wear and tear to the vehicle and riders
• Third party liability insurance

Some insurers provide both risks of damage and third-party liability in one insurance policy. A two-wheeler insurance policy is a general insurance policy which means it lapses after one year and has to be renewed.

Benefits of buying a two-wheeler insurance policy:

1. Covers the cost of damage:
A two-wheeler insurance policy covers the cost of damage due to theft, natural disasters, accidents, human-made disasters. This reduces the financial hit to the insured.

2. Cashless claim service:
Like health insurance policies, two-wheeler insurance companies have tie-ups with garages. Getting your two-wheeler repaired in such garages will lead to a cashless claim service. The insurance company will directly pay the bill to the garage which reduces any hassles that the insured would face. However, the insured has to bear any expenses to get the damaged two-wheeler to the garage.

3. No claim bonus:
In case the insured does not raise any claim in the previous year, the insurer will reward him with a no claim bonus. This no claim bonus can be in the form of an increase in the sum assured any additional coverage or a discount in premium. However, this bonus is at the discretion of the insurance company. It is possible to transfer the existing no claim bonus from one insurance policy to the next insurance policy on renewal.

4. Convenient online renewal:
Two-Wheeler insurance can be conveniently renewed online either through an insurance aggregator or through the insurance company's website. Before buying two-wheeler insurance online, it is best to do research and find out the best plan that suits you. Since two-wheeler insurance is general insurance, the policy needs to be renewed every year which means switching from one insurer to the other is very easy.

5. Discounts to customers:
Insurers extend cuts to customers who have already purchased other types of insurance from them. They also provide other add ones and other benefits for good customers.

What are different types of insurance?

We all know that life is unpredictable. An emergency can arise at any point, and such a crisis can lead to losses, not all of which may be monetary. One of the ways of mitigating this is insurance.

The main goal of taking insurance is to protect us from different risks and losses. Getting adequate coverage in various aspects is quite important to ensure protection in all areas of life.

When it comes to an insurance policy, it is not just life insurance that we need to focus on. There are different types of insurance, which is essential to ensure we have all round protection.

Here are the different types of insurance policy:

1. Life insurance:
A life insurance policy covers the risk of the policyholder's death. The sum assured is paid on the death of the policyholder or in some cases on the maturity of the policy. Life insurance policies can also be taken to fund a child's education. Some plans include critical illness, accident, disability riders which provide additional coverage in case of such scenarios.

2. Health insurance:
In a health insurance policy, the insured is protected against the cost of hospitalisation. Depending on the policy coverage, it may include pre-hospitalization, post hospitalisation expenses and other treatment-related expenses. This can be taken for the entire family at once as well. Health insurance can either be cashless where bills are settled directly with the hospital, or reimburse the policyholder against submitted invoices.

3. Motor insurance:
Motor insurance covers the risk of theft, damage, or accident to a motor car, the driver, and the passengers. A third party liability coverage also covers against the risk of loss or damage caused to third parties by the driver of the vehicle.

4. Two wheeler insurance:
A two-wheeler insurance policy is similar to a motor insurance policy, except it covers against loss, damage, theft to a two-wheeler. Both motor and two-wheeler insurance policies include repairs at network garages.

5. Travel insurance:
This insurance policy covers a whole range of risks that a traveller may incur while travelling either domestically or abroad. Travel insurance is mandatory while travelling abroad.

6. Home insurance:
A home insurance policy covers the risk of burglary, damage to the house due to natural disasters, theft, and other threats. It can either be a comprehensive home insurance policy or include only some of the risks.

With the advent of insurance aggregators and the digital age, it is possible to get online insurance within a matter of minutes. In some cases, online coverage may turn out to be cheaper than the protection offered by agents. Checking different aggregators for the rates and terms is the best way of choosing the right insurance.

What is a gold loan?

A gold loan has become a trendy way for people to raise funds for their requirements, especially in smaller towns and cities. A gold loan is a type of personal loan where the gold acts as collateral for the loan. This loan is given out for a short duration. However, unlike personal loans, gold loans can be structured so that the interest is paid during the tenure and principal is repaid at the end of the mandate. 

Features of a gold loan:

• The amount of the loan depends on the value of the gold. Each lender generally has in house verification facilities to arrive at the value of the gold. The cost depends on the market prices for gold. Lenders verify the weight and the purity of the gold typically.
• Generally, most lenders have a loan to value ratio (LTV) of around 65% to 75% for a loan against gold. This means 65% to 75% of the value of the gold will be given out as a loan. Some lenders may offer a higher LTV but charge a higher rate of interest.
• The gold has to be hypothecated, which means it will be kept under lock and key by the lender.
• The lender usually appraises the gold in front of the customer. It is essential to ensure this process happens in front of the customer to provide complete transparency.
• Like a personal loan, a loan against gold does not have any conditions on the end use of funds. Also, a gold loan can be prepaid before the due date without incurring any charges for the same.
• It is important to check the repayment schedule and the charges before taking the gold loan. Each gold loan lender has a different repayment schedule, which is why it is best to check the type of repayment, i.e. principal at the end of the tenure with regular interest payments or regular interest and principal payments.
• A gold loan is a secured loan. This means in case of default; the lender can dispose of the gold to recover the unpaid interest and principal amount. However, this disposal will happen only after giving sufficient notice to the defaulting borrower. 
• The gold loan interest rate varies from lender to lender, but an indicative range for gold loans is between 9.5% to 18.5% depending on the lender. Lenders may charge a higher rate of interest for borrowers who want a higher LTV.
• To take a gold loan, lenders only require basic KYC documents such as identity proof and address proof for availing the gold loan.

A gold loan is an excellent way to raise funds quickly, especially in case of emergencies. Lenders disburse loans rapidly which makes it especially well suited when funds are required in a hurry.