Today many options are available for parking the money then also the senior citizens prefer to invest their money in fixed deposits (FDs). While, the younger generation earning handsome income prefers to invest in mutual funds and equity capital.
One of the main reasons for FDs is being preferred because they are safe and risk-free method of investing. It is obvious in old age no one wants to take risk in financial matters and all one needs is decent amount of money to survive and enjoy life.
Apart from this the banks have special interest rates for senior citizens between 7.5 and 9.5%, depending upon the time period one wants to invest in.
Meghji Mehta, a Koparkhairane resident, said "After working all these years like a donkey, it is finally time of the life where I can relax and enjoy my life. I don't want to depend on my son, until I can take care of my wife and myself. So I invest in fixed deposit, as there are a few banks who give high rate of interest for the senior citizens."
Today, senior citizens are happy investing in FDs, because of security and surety as share market is unpredictable. An executive from a Vashi-based bank, on condition of anonymity said, "We provide special interest rates for the senior citizens, depending upon the time frame they are looking out for. There has been continuous growth in number of fixed deposits in the past 7-8 months. With stock market being so unpredictable, more senior citizens are opting for the FDs. Apart from senior citizens others have also started investing in FDs, too."
Thursday, May 22, 2008
Wednesday, May 14, 2008
High inflation invest in property
Inflation is at high levels. Income on fixed income means like bonds and fixed deposits is not going to give good returns especially in the fixed deposit section, who have invested for less than 1 year are going to earn negative interest. Among the salaried class most of them invest in fixed deposits but seeing the present scenario investments in real estate seems to be safe and rewarding. It is being considered strong evade against inflation. Increase in inflation levels giving rise to uncertainties and house rents are also moving upwards, therefore it is a time you should think of having a roof over your head.
During the past few years, home loan rates were constantly moving slowly northwards. Adding to despair the steel and cement prices have also increased thus increasing the construction costs. But there are some indicators commonly pointing towards change for good in the coming time period. Some banks have already reduced their rates and others have lowered rates for their new customers.
Now the question arises seeing the present scenario is it the right time to invest in property?
There is competition among the banks to lure in maximum customers as there is very rare chance of home loan borrowers to default on their monthly commitments. Then flexible repayment options and lucrative loan packages are available to choose from which make the loans materialize affordable. Looking at the rising cost of renting in the cities makes more sense to invest in property and pay EMIs towards it. If you have a good credit record and have a stable regular income then getting a home loan is not a difficult task.
The salaried class people prefer to take home loan as tax benefits are associated with home loans such as the amount of EMI outflow is directly dependent on principal amount, rate of interest and loan tenure.
Let us see what the tax benefits attached to home loan. The greater the loan amount, the greater the EMI towards the loan. EMI can be divided into two components - the principal component and the interest component. In the beginning of the home loan tenure, the equated monthly installments will have a higher share of interest component. However, towards the end of the tenure the principal component will be high.
The principal repayment that borrowers make on their home loan is eligible for income deduction under Section 80C of the Income Tax Act. The limit under Section 80C is Rs 1 lakh.
U n d e r Section 24 of the Income Tax Act, the maximum amount of interest deductible from your taxable income is Rs 1.5 lakhs. As a result, your taxable income decreases by that amount. This limit is for self-occupied property only. Homeowners who invest in a second house can also claim benefits for interest repayment of the home loan. There is no limit on the interest repaid unlike the Rs 1.5 lakhs limit under Section 24 for self-occupied property.
During the past few years, home loan rates were constantly moving slowly northwards. Adding to despair the steel and cement prices have also increased thus increasing the construction costs. But there are some indicators commonly pointing towards change for good in the coming time period. Some banks have already reduced their rates and others have lowered rates for their new customers.
Now the question arises seeing the present scenario is it the right time to invest in property?
There is competition among the banks to lure in maximum customers as there is very rare chance of home loan borrowers to default on their monthly commitments. Then flexible repayment options and lucrative loan packages are available to choose from which make the loans materialize affordable. Looking at the rising cost of renting in the cities makes more sense to invest in property and pay EMIs towards it. If you have a good credit record and have a stable regular income then getting a home loan is not a difficult task.
The salaried class people prefer to take home loan as tax benefits are associated with home loans such as the amount of EMI outflow is directly dependent on principal amount, rate of interest and loan tenure.
Let us see what the tax benefits attached to home loan. The greater the loan amount, the greater the EMI towards the loan. EMI can be divided into two components - the principal component and the interest component. In the beginning of the home loan tenure, the equated monthly installments will have a higher share of interest component. However, towards the end of the tenure the principal component will be high.
The principal repayment that borrowers make on their home loan is eligible for income deduction under Section 80C of the Income Tax Act. The limit under Section 80C is Rs 1 lakh.
U n d e r Section 24 of the Income Tax Act, the maximum amount of interest deductible from your taxable income is Rs 1.5 lakhs. As a result, your taxable income decreases by that amount. This limit is for self-occupied property only. Homeowners who invest in a second house can also claim benefits for interest repayment of the home loan. There is no limit on the interest repaid unlike the Rs 1.5 lakhs limit under Section 24 for self-occupied property.
Friday, May 9, 2008
SBI raised interest rates on deposits of NRE
Country’s largest lending bank State Bank of India on Monday raised interest rates on deposits of Non Resident Indians with effect from May 1.
The raise has been done on Non Resident External (NRE) rupee deposits of one year to less than 2 years to 3.08 per cent from 2.49 per cent, two years to less than three years to 3.18 per cent from 2.5 per cent and three to five years to 3.45 per cent from 2.81 per cent.
Likewise hikes have also been done on Foreign Currency Non Resident (FCNR) deposits held in US Dollars, Pound Sterling, Euro, Australian Dollar, Canadian Dollar and Yen.
After the hike the interest on US Dollar deposits of one to two years will have 2.33 per cent as against 1.74 per cent.
Similarly interest rate on deposits of two to three years has been raised to 2.43 per cent from 1.75 per cent, three to four years to 2.7 per cent from 2.08 per cent, four to five years to 2.93 per cent from 2.35 per cent.
However interest rates on five years deposits, interest rates have been raised to 3.11 per cent from 2.65 per cent.
The raise has been done on Non Resident External (NRE) rupee deposits of one year to less than 2 years to 3.08 per cent from 2.49 per cent, two years to less than three years to 3.18 per cent from 2.5 per cent and three to five years to 3.45 per cent from 2.81 per cent.
Likewise hikes have also been done on Foreign Currency Non Resident (FCNR) deposits held in US Dollars, Pound Sterling, Euro, Australian Dollar, Canadian Dollar and Yen.
After the hike the interest on US Dollar deposits of one to two years will have 2.33 per cent as against 1.74 per cent.
Similarly interest rate on deposits of two to three years has been raised to 2.43 per cent from 1.75 per cent, three to four years to 2.7 per cent from 2.08 per cent, four to five years to 2.93 per cent from 2.35 per cent.
However interest rates on five years deposits, interest rates have been raised to 3.11 per cent from 2.65 per cent.
Tuesday, May 6, 2008
Bank of India hikes deposit rates to mobilize funds
State owned Bank of India is order to recover resources hiked its deposit rates by up to 0.75 per cent in certain maturities. The hike will come into effect from May 1.
Few days back the Reserve Bank of India has revised CRR. It is being considered that revision of rates has come at a time when banks’ margins have come under pressure due to hike of 0.75 per cent in CRR and even in the recent months there has been slow down in the credit take off.
In a press meet bank official told the reporters the increase in deposit rates will be subject to review by end- June.
The official said, "The rates have been revised with a view to mobilize funds from deposits in the beginning of the financial year. We will review our rates by June 30, after which they might be revised again ".
The bank sources said the revised rates for deposits having a maturity one year to less than two years, will stand at 9.15 per cent as against the existing 8.50 per cent while for two to three years, the new rate is 9.25 per cent (8.75 per cent).
Likewise, deposits having a maturity period of three to five years has been marked a rate of 9.50 per cent as against the existing 8.75 per cent.
Few days back the Reserve Bank of India has revised CRR. It is being considered that revision of rates has come at a time when banks’ margins have come under pressure due to hike of 0.75 per cent in CRR and even in the recent months there has been slow down in the credit take off.
In a press meet bank official told the reporters the increase in deposit rates will be subject to review by end- June.
The official said, "The rates have been revised with a view to mobilize funds from deposits in the beginning of the financial year. We will review our rates by June 30, after which they might be revised again ".
The bank sources said the revised rates for deposits having a maturity one year to less than two years, will stand at 9.15 per cent as against the existing 8.50 per cent while for two to three years, the new rate is 9.25 per cent (8.75 per cent).
Likewise, deposits having a maturity period of three to five years has been marked a rate of 9.50 per cent as against the existing 8.75 per cent.
Wednesday, April 30, 2008
Kotak Mahindra hiked term deposit rates for various maturities
Private sector lender Kotak Mahindra Bank hiked interest rates on its term deposits for various maturities on Monday.
Giving the details on the hike in term deposit rates the K V S Manian, Group Head - Retail Liabilities and Branch banking said, "This hike in interest rates would benefit the retail customers given the current volatile market situation."
He added that from this hike the customers will be able to earn retail term deposit rates of 8.50 per cent pa for term deposits of 271 days to less than one year and 9.25 per cent pa for one year to less than five years.
On the hike in term deposit rates, K V S Manian, Group Head - Retail Liabilities and Branch banking, said, "This hike in interest rates would benefit the retail customers given the current volatile market situation."
Giving the details on the hike in term deposit rates the K V S Manian, Group Head - Retail Liabilities and Branch banking said, "This hike in interest rates would benefit the retail customers given the current volatile market situation."
He added that from this hike the customers will be able to earn retail term deposit rates of 8.50 per cent pa for term deposits of 271 days to less than one year and 9.25 per cent pa for one year to less than five years.
On the hike in term deposit rates, K V S Manian, Group Head - Retail Liabilities and Branch banking, said, "This hike in interest rates would benefit the retail customers given the current volatile market situation."
Saturday, April 19, 2008
Volume of fixed deposits hVolume of fixed deposits have shrunkave shrunk
Recently there was news that RBI is not comfortable with Non Banking Finance Companies (NBFCs) since 1998. When NBFCs faced crisis the RBI was given a role of protector of public deposits which RBI did not want to be. During that time the apex bank had tightened regulatory norms for NBFCs and tried to limit access to fixed deposits window by introducing ratings and fixing the limits to such borrowings. And over the last decade these efforts has given good results.
Since then there has been fall down in the number of such deposit taking entities. Its have been more than five years, the entities have come down by half to about 401 as of March 2007. As of March 2007 even the volume of such deposits has also reduced from a little over Rs 5,000 crore to about Rs 2,000 crore. Due to these conditions the RBI has now planned to limit the public deposits window to banks alone.
Reacting to RBI’s plan of limiting the public deposits window to banks alone, a senior NBFC industry official said, “The Fixed Deposit as an instrument is dead. There was a time when it was very popular with retirees and those approaching superannuation. Now even if the Reserve Bank of India were to allow free access to such deposits, there won’t be too many takers. The stock market boom over the past few years, the dominance of mutual funds and ULIPs has almost eliminated this investment option.”
Will anyone be affected by this move of RBI comes through? NBFC industry officials believe that few small NBFCs will see rise in intermediation costs.
They will be helpless and have no other option but to approach banks who may charge higher rates. Some of the industry insiders feel that most of the companies have already diversified their funding sources so they will not face much problem.
Since then there has been fall down in the number of such deposit taking entities. Its have been more than five years, the entities have come down by half to about 401 as of March 2007. As of March 2007 even the volume of such deposits has also reduced from a little over Rs 5,000 crore to about Rs 2,000 crore. Due to these conditions the RBI has now planned to limit the public deposits window to banks alone.
Reacting to RBI’s plan of limiting the public deposits window to banks alone, a senior NBFC industry official said, “The Fixed Deposit as an instrument is dead. There was a time when it was very popular with retirees and those approaching superannuation. Now even if the Reserve Bank of India were to allow free access to such deposits, there won’t be too many takers. The stock market boom over the past few years, the dominance of mutual funds and ULIPs has almost eliminated this investment option.”
Will anyone be affected by this move of RBI comes through? NBFC industry officials believe that few small NBFCs will see rise in intermediation costs.
They will be helpless and have no other option but to approach banks who may charge higher rates. Some of the industry insiders feel that most of the companies have already diversified their funding sources so they will not face much problem.
Thursday, April 3, 2008
Bank of Baroda revised interest rates for FCNR (B)
Public-sector lender Bank of Baroda has revised interest rates its term deposits in foreign currency by Non Resident Indians (NRIs) segment. The deposits having different maturity period carry different interest rates.
A press release of the bank stated for the revised rate for Foreign Currency Non-Resident (Banks) deposits (FCNR (B)) and Non Resident External (NRE) term deposits in dollar, having a maturity period of 1-2 years, has been fixed at 1.74 per cent (1.96).
The bank said, while the deposits in Pound, Euro and Yen having the same maturity, the revised rates will be 5.09 per cent (4.81), 3.98 per cent (3.64) and 0.35 per cent (0.35), respectively.
The revised rates for the deposits having tenure of 2-3 years, 3-4 years, 4-5 years and five years in US dollar, are 1.75 per cent (1.87), 2.06 per cent (2.19), 2.36 per cent (2.48) and 2.65 per cent (2.74), the bank said.
Similarly, NRE deposits having a maturity period of 1-2 years, the rate has been revised to 2.49 per cent (2.71) while for 2-3 years and 3-4 years, the new rates are 2.50 per cent (2.62), 2.81 per cent (2.94) respectively.
A press release of the bank stated for the revised rate for Foreign Currency Non-Resident (Banks) deposits (FCNR (B)) and Non Resident External (NRE) term deposits in dollar, having a maturity period of 1-2 years, has been fixed at 1.74 per cent (1.96).
The bank said, while the deposits in Pound, Euro and Yen having the same maturity, the revised rates will be 5.09 per cent (4.81), 3.98 per cent (3.64) and 0.35 per cent (0.35), respectively.
The revised rates for the deposits having tenure of 2-3 years, 3-4 years, 4-5 years and five years in US dollar, are 1.75 per cent (1.87), 2.06 per cent (2.19), 2.36 per cent (2.48) and 2.65 per cent (2.74), the bank said.
Similarly, NRE deposits having a maturity period of 1-2 years, the rate has been revised to 2.49 per cent (2.71) while for 2-3 years and 3-4 years, the new rates are 2.50 per cent (2.62), 2.81 per cent (2.94) respectively.
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