Tax Saver FDs vs VPF
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Hi dimers,
I am a salaried person, and confused between a tax saver FD and VPF. I went through previous threads, where I got to know that suryoday bank is offering 8.25 % interest rate on 5 years tax saving fd. Similarly, VPF gives 8.25% as well. I have approx 5 lacs to invest now but since market is on top, i am not so keen on MF or stocks investment. So What should I choose? I want something that gives good returns as well as can contribute towards Section 80C investments. My pincode is not serviceable by Suryoday bank, so that's also a concern, whether they will let me open FD or not or stable money app can help?
Pls advise.
I am a salaried person, and confused between a tax saver FD and VPF. I went through previous threads, where I got to know that suryoday bank is offering 8.25 % interest rate on 5 years tax saving fd. Similarly, VPF gives 8.25% as well. I have approx 5 lacs to invest now but since market is on top, i am not so keen on MF or stocks investment. So What should I choose? I want something that gives good returns as well as can contribute towards Section 80C investments. My pincode is not serviceable by Suryoday bank, so that's also a concern, whether they will let me open FD or not or stable money app can help?
Pls advise.
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https://www.desidime.com/comments/permalink/10180138
Please check if new regime is beneficial for you. Govt has made it such that for majority people new regime is coming out as beneficial (even without 80c).
Otherwise, out of above 2 choices. Tax saver fd is better but not with suryoday bank. Find another bank thats physically available around or has tieup with some online portal for online fd. These small finance banks dont have much facilities.
Note- This is assuming that interest rates have peaked and will fall soon. If you dont have a physical high interest bank then even vpf is fine , difference wont be much due to eventual tax free nature of pf proceeds.
https://www.desidime.com/comments/permalink/10180258
In physical banks, I have account in HDFC and IDFC, that offer 7% on tax saving FDs. I need to figure out first whether Old or New regime is beneficial for me. If new is better then I can invest few lacs in 500 days FD at 7.9% in IDFC. For rest amount, Can wait for a fall in market to invest in MF.
Likewise, If old is better then 7% wali tax saving fd or VPF is better option.
Is there anything else that provides better returns and safe as well?
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https://www.desidime.com/comments/permalink/10180286
VPF is a good option.
it gives monthly easy deduction from your salary. Interest rate is better than FD or PPF.
most of the employer allow only once/twice in year to set/change the VPF% contribution. so do check with your employer first.
also, do note that any interest accrued on more than 2.5 lakh contribution ( including 12% PF + VPF) will be taxable as per your slab rate.
PS (extra tip) : ask your employer to contribute in your NPS T1 as well. which comes under 80CCD2 deduction both in Old & New regime.
it gives monthly easy deduction from your salary. Interest rate is better than FD or PPF.
most of the employer allow only once/twice in year to set/change the VPF% contribution. so do check with your employer first.
also, do note that any interest accrued on more than 2.5 lakh contribution ( including 12% PF + VPF) will be taxable as per your slab rate.
PS (extra tip) : ask your employer to contribute in your NPS T1 as well. which comes under 80CCD2 deduction both in Old & New regime.
https://www.desidime.com/comments/permalink/10180452
@admin Kindly check the feasibility of this better sitting in the Finance sub-section.
‣ age (tentative remaining productive/ earning opportunities) and ‣ risk appetite (levels) matter in such planning decisions.
Currently your post leaves that yo assumption or guessing.
In a multi-party democracy like ours (unlike in democracies like Democratic People's Republic of Korea) such games.. more like 'sham' or tax breaks, exemptions help keep masses stay happy in their imaginary 'happy spaces', 'safe spaces'.
In younger years, with even two three decades of productive/ earning capabilities left
i would never have even thought of (let alone say it out loud) 'best investment opportunity/ opportunities' and 'tax exemptions' in the same sentence.
but then that is just me.
however between the narrow band you selected (two options), the tax liabilities (or lack of it) on these investments are likely going to be similar. hopefully the tax bracket too does not change, just because of their redemption later and thus both corpuses would be treated at par in either case.
given the ever increasing cost of living, one has to decide if they are contended with such sub-optimal returns (for the lesser risk)
or (whether one can)opt for other avenues where the 'risk adjusted returns' are significantly higher than this.
[Risk adjusted returns are a national concept. The 'cost' of higher risk is (reduced from) accounted for in the absolute returns.]
off one's total networth, how much is the five hundred thousand is unknown to us
as also what components are already in fairly liquid asset classes (should there be a sudden need for them) is also something we are unaware of. you might want to talk on that or can choose not to elaborate.
however those things too matter. for example, if this five hundred thousand is over 40%-50% ofvthe overall financial assets, then one looks at them differently.. than if it is a smaller percentage of the overall financial assets.
As for timing the market, I suppose it has already been iterated and reiterated numerous times as to how and why it is flawed to take that approach to 'investing'. (investing is different than trading.)
investing does not really weigh in as much on whether the perceived market levels or economic levels are high or low.
we are living in an age where Russi, China, Isreal might almost bring us on the brink of a full fledged third global war in past 200 years
and still most economies and most markets have hardly had a long term impact of any trade wars or real wars.
yes, agreed that a five year horizontal is a rather small bracket (timeframe), but still one can look beyond 'timing' the market.. even for a 5 year investment.
‣ age (tentative remaining productive/ earning opportunities) and ‣ risk appetite (levels) matter in such planning decisions.
Currently your post leaves that yo assumption or guessing.
In a multi-party democracy like ours (unlike in democracies like Democratic People's Republic of Korea) such games.. more like 'sham' or tax breaks, exemptions help keep masses stay happy in their imaginary 'happy spaces', 'safe spaces'.
In younger years, with even two three decades of productive/ earning capabilities left
i would never have even thought of (let alone say it out loud) 'best investment opportunity/ opportunities' and 'tax exemptions' in the same sentence.
but then that is just me.
to each their own. 'peace of mind' too is a thing after-all.
monies xan be put to good, better use with minimal incremental risk too.however between the narrow band you selected (two options), the tax liabilities (or lack of it) on these investments are likely going to be similar. hopefully the tax bracket too does not change, just because of their redemption later and thus both corpuses would be treated at par in either case.
given the ever increasing cost of living, one has to decide if they are contended with such sub-optimal returns (for the lesser risk)
or (whether one can)opt for other avenues where the 'risk adjusted returns' are significantly higher than this.
[Risk adjusted returns are a national concept. The 'cost' of higher risk is (reduced from) accounted for in the absolute returns.]
off one's total networth, how much is the five hundred thousand is unknown to us
as also what components are already in fairly liquid asset classes (should there be a sudden need for them) is also something we are unaware of. you might want to talk on that or can choose not to elaborate.
however those things too matter. for example, if this five hundred thousand is over 40%-50% ofvthe overall financial assets, then one looks at them differently.. than if it is a smaller percentage of the overall financial assets.
As for timing the market, I suppose it has already been iterated and reiterated numerous times as to how and why it is flawed to take that approach to 'investing'. (investing is different than trading.)
investing does not really weigh in as much on whether the perceived market levels or economic levels are high or low.
we are living in an age where Russi, China, Isreal might almost bring us on the brink of a full fledged third global war in past 200 years
and still most economies and most markets have hardly had a long term impact of any trade wars or real wars.
yes, agreed that a five year horizontal is a rather small bracket (timeframe), but still one can look beyond 'timing' the market.. even for a 5 year investment.
https://www.desidime.com/comments/permalink/10180517
Tell me one thing, what's more important for you: return OF investment or return ON investment?
https://www.desidime.com/comments/permalink/10180817
For me, Its Return on Investment. I checked in calculator, If i go with old regime, even If i invest 1.5 lacs in 80 c and few other sections, tax payable is same as if I had went with New regime. So probably new regime is beneficial for me.
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https://www.desidime.com/comments/permalink/10180540
For tax saving upto 1.5L if u r looking for investment, it's always going to be PF. Mostly because, within that limit, PF is exempt exempt exempt (means exemption on investment, exemption of interest and exemption of principal on maturity). Compared to that a tax saving fd doesn't have exemption of interest on maturity.
Outside that limit of 1.5L, neither tax saving fd or PF is a good investment because u won't get any tax benefit and there are quite a few risk less instruments which will give you way better returns. Like small bank Fds upto even 9% with upto 5lakh govt assured cover (in case the bank goes kaput).
https://www.desidime.com/comments/permalink/10181178
VPF- longer lock in.. withdrawal only in certain situations..also it comes under EEE category.. i.e no tax on interest or withdrawals..
FD- lock in only 5 years.. .. Interest earned is taxed.. so effective earning is low compared to VPF..
Invest wisely based on your situation
https://www.desidime.com/comments/permalink/10181187
I saw VPF has a lock in of 5 years, so after 5 years still its withdrawn under certain situations like unemployment or illness or we can withdraw easily?
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https://www.desidime.com/comments/permalink/10181394
Considering you have zero finance and macro economics knowledge..here are your options..
Zero finance knowledge or stock market knowledge:
1. invest in mutual funds 2. VPF is better. 3. Invest in FD ..
People who are financially sound will not invest in FD ..
sukanya FD PPF are bewakoof log. I was dat bewakoof few years back
Full knowledge:
Stock market. 5 years.. minimum 100% or max 1000% returns
Stocks
HDFC and bandhan bank. Invest 5k and check returns after 5 years. Exit anytime you see 100 returns n book ltcg free tax
https://www.desidime.com/comments/permalink/10183037
@iffatkhatoon98
have you head about a financial term called as "Risk Profile".
everyone here is not a risk taker someone might have saved funds by saving every penny and want to invest in a safe instrument.
have you head about a financial term called as "Risk Profile".
everyone here is not a risk taker someone might have saved funds by saving every penny and want to invest in a safe instrument.
https://www.desidime.com/comments/permalink/10245365
True. Not everybody is born genius 
Sitting on 70% cash and waiting for market to crash again. Some longbterm investments for one of my account. I did blunder by choosing ppf.. people who want to play safe and dnt want to take stress can invest in Mutual funds. Free advice .. BUY TCS HDFC bank reliance laursen and tubro for five years. In equal quantity. Then compare returns. Buy only 1 quantity so you can compare and see wat is notional loss
Sitting on 70% cash and waiting for market to crash again. Some longbterm investments for one of my account. I did blunder by choosing ppf.. people who want to play safe and dnt want to take stress can invest in Mutual funds. Free advice .. BUY TCS HDFC bank reliance laursen and tubro for five years. In equal quantity. Then compare returns. Buy only 1 quantity so you can compare and see wat is notional loss
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Not talking about pf..
Yes, vpf is actually pf only.
When done within 12% limit then it's called epf, above that it's vpf. Both contributions go towards pf account only.
Whats vpf?
Vpf goes to the same pf account.... Contribution is over and above normal pf... Hence called voluntary pf where you can choose to add more into your pf account.
it gives monthly easy deduction from your salary. Interest rate is better than FD or PPF.
most of the employer allow only once/twice in year to set/change the VPF% contribution. so do check with your employer first.
also, do note that any interest accrued on more than 2.5 lakh contribution ( including 12% PF + VPF) will be taxable as per your slab rate.
PS (extra tip) : ask your employer to contribute in your NPS T1 as well. which comes under 80CCD2 deduction both in Old & New regime.
VPF is good if you dont need the funds, it sits in your of account.
if you are contributing to nps, The extra tip given above is a good tax saving option