Best Interest Rates on Fixed Deposits April 2015

Best FD Rates on Deposits of below 1 crore in April 2015:

Bank Name

1 Year 2 Year 3 Year 4 Year

5 Year

Allahabad Bank 9.05 9.05 9.05 9.05 8.75
Andhra Bank 9.00 9.00 9.00 8.75 8.75
Bank of Baroda 8.75 8.75 8.75 8.50 8.50
Bank of India 9.05 9.05 9.05 9.05 9.05
Bank of Maharashtra 9.00 9.10 9.15 9.00 9.00
Canara Bank 9.05 9.05 9.05 9.05 9.05
Corporation Bank 9.00 9.00 9.11 9.00 9.00
Indian Bank 9.00 9.00 9.00 8.75 8.75
IDBI Bank 9.00 9.00 9.00 9.00 9.00
OBC Bank 9.00 8.75 8.75 8.75 8.75
Punjab National Bank (PNB) 9.00 9.00 9.00 9.00 9.00
Repco Bank 9.30 9.30 9.25 8.75 8.75
State Bank of India (SBI) 9.00 9.00 8.75 8.75 8.75
Syndicate Bank 9.05 8.50 8.75 8.75 8.75
Union Bank of India 9.00 9.00 9.00 9.00 9.00
Vijaya Bank 9.05 9.00 9.00 9.00 9.00
Citi Union Bank 9.25 9.00 9.00 9.00 9.00
Lakshmi Vilas Bank 9.30 9.30 9.30 9.30 9.30
KVB 9.00 9.00 9.25 9.25 9.25
Karnataka Bank 9.10 9.10 9.10 9.00 9.00
Kotak Bank 9.00 8.75 8.50 8.50 8.25
Yes Bank 9.00 8.75 8.75 8.75 8.75
ICICI Bank 8.00 9.00 8.75 8.75 8.75
HDFC Bank 8.75 8.75 8.75 8.75 8.75
Axis Bank 8.90 9.20 9.05 9.05 8.75
Federal Bank 9.00 8.75 8.75 8.75 8.75
HSBC 8.25 7.75 8.00 6.75 6.75
Deutsche Bank 7.75 7.75 8.25 8.50 9.00
Citibank 7.75 7.75 NA NA NA

 

Best Options for Investments, Under Section 80C

Options for Investments

PPF

EPF and VPF

ELSS Funds

Returns: Linked to government bond yield, so will vary every year. 8.7% for 2014-15. Returns: 8.5% for 2014-15 Returns: Market linked (14.2% in past 3 years)
Safety: very safe as it is backed by government Safety: Very Safe Safety: Carry market risk associated with stocks
Liquidity: Low. Locked for 15 years but partial withdrawals allowed after the fifth year. Liquidity: Low. Withdrawals allowed after five years for specific purposes. Liquidity: Locked in for three years, after which full withdrawal permitted.
Taxation: interest and maturity amount completely tax free. Taxation: Interest and corpus tax free, if withdrawn after five years. Taxation: No Tax on withdrawals because long term capital gains are tax free.
Best For: Conservative investors looking for assured returns and tax free corpus. Best For: Salaried individuals saving for retirement. Best For: Investors with higher risk appetite hoping to generate inflation beating returns.
SMART Tips: invest before the 5th of the month so that the investment gets interest for that month as well. SMART Tips: Transfer your EPF account when you change jobs. Dormant accounts stop earning interest after three years. SMART Tips: Invest small amounts at monthly intervals in ELSS funds. SIPs reduce the risk of investing in equities.

 

A Guide to Financial Markets and various options available for investment

This guide has all you want to know about financial markets and instruments:

What are the various options available for investment?

-         Physical Assets like Real Estate, Gold/ Jewellery, Commodities etc

-         Financial Assets like Fixed Deposits, Small Saving Instruments with Post Offices, Insurance/ provident fund/ Pension Funds etc or Securities Market related instruments like Shares, bonds, debentures etc

What are the main financial markets and their instruments?

Money Market: The money market is a market for financial assets that are close substitutes for money .It is a market for overnight to short term funds and the debt instruments are having maturity period of one day to one year.

Main Features:

  • It is a wholesome market
  • The Volumes are high
  • Major Players – RBI , Discount and Finance House of India (DFHI), Banks, NBFCs ,Mutual Funds, Corporate Investors, Securities Trading Corporation of India (STCI) State Governments, Provident Funds, Primary Dealers, PSUs, NRIs.

Money market Instruments:

  • Treasury Bills
  • Commercial Papers
  • Certificate of Deposits
  • Commercial Bills
  • Call/Notice money market
  • T-bills, Call Money Market and Certificate of Deposit provide liquidity for government and banks
  • Commercial Paper and Commercial Bills provide liquidity for the commercial sector and the financial intermediaries
  • Debt Market: Debt Market is a market where fixed income securities of various types are issued and traded.

Functions of Debt Market:

  • Plays a Key role in mobilization and allocation of resources.
  • Financing development activities of government.
  • Liquidity management in tune with short term and long term objectives.
  • Pricing of non government securities in the financial markets.

Characteristics of Debt Market:

  • Competitive Market Structure
  • Low Transaction Cost
  • Strong an safe market structure

Participants in Debt Market:

  1. Central and State government
  2. Primary Dealers
  3. Public Sector Undertakings
  4. Corporates
  5. Banks
  6. Mutual Funds
  7. Provident and Pension Funds
  8. Charitable institutions and Trusts
  9. Classification of Debt instruments:
MARKET SEGMENT ISSUER INSTRUMENTS
Government Securities Central Government

State Governments

Zero coupon bonds, Coupon bonds, Floating rate bonds

Coupon Bonds, Floating Rate Bonds

Public Sector Bonds Public Sector Units PSU Bonds, Debentures, Deep Discount Bonds
Private Sector Bonds Corporates

Banks

Financial institutions

Debentures, Bonds, FRBs

Debentures and Bonds

 

So, carefully invest in these markets!

A GUIDE TO MUTUAL FUNDS

This guide has all you want to know about mutual funds:

What is a mutual fund?

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.

Is investment in mutual fund suitable?

The money collected is invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

What are the types of Mutual Fund Schemes?

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc.

By Structure

  • Open Ended Schemes
  • Close Ended Schemes
  • Interval Schemes

By Investment Objectives

  • Growth Schemes
  • Income Schemes
  • Balance Schemes
  • Money Market Schemes

Other Schemes

  • Tax Saving Schemes

Special Schemes

  • Index Schemes
  • Sector Specific Schemes

What is the difference between the open ended and close ended scheme?

Open ended funds can issue and redeem units any time during the life of the scheme while close ended funds cannot issue new units except in case of bonus or rights issue. Hence, unit capital of open ended funds can fluctuate on daily basis while that is not the case for close ended schemes. Other way of explaining the difference is that new investors can join the scheme by directly applying to the mutual fund at applicable net asset value related prices in case of open ended schemes while that is not the case in case of close ended schemes. New investors can buy the units from secondary market only.

What is the aim of growth/equity oriented scheme?

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

What are Income/debt oriented schemes?

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

 

What are balanced schemes?

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

The bottom line:

Many investors tend to focus exclusively on investment return, with little concern for investment risk. The five risk measures

:alpha, beta, r-squared, standard deviation and the Sharpe ratio can provide some balance to the risk-return equation. The good news for investors is that these indicators are calculated for them and are available on several financial websites, as well as being incorporated into many investment research reports. As useful as these measurements are, keep in mind that when considering a stock, bond or mutual fund investment, volatility risk is just one of the factors you should be considering that can affect the quality of an investment.

 

A FULL HELP GUIDE TO BONDS

This short guide has all you want to know about bonds:

WHAT IS A BOND?

A bond is a debt-security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation or other entity known as the issuer. Bonds issued by State Governments or Municipalities are usually exempt from tax.

WHAT ARE THE COMPONENTS OF BOND?

TERMS MEANINGS
Bonds Loans (in the form of a security)
Issuer of Bonds Borrower
Bond Holder Lender
Principal Amount Amount at which issuer pays interest and which is repaid on the maturity date
Issue Price Price at which bonds are offered to investors
Maturity Date Length of time (More than one year)
Coupon Rate of interest paid by the issuer on the par/face value of the bond
Coupon Date The date on which interest is paid to investors

 

WHAT ARE THE TYPES AND CHARACTERISTICS OF BONDS?

Government Securities:

  • It is the Reserve Bank of India that issues Government Securities on behalf of Government of India.
  • Maturity period is of 1 to 30 years.
  • Offer fixed interest rate; interest rate paid semi-annually.
  • For shorter term, there are Treasury Bills or T-Bills which are issued by RBI for 91 days, 182 days and 364 days.

Corporate Bonds:

  • These bonds come from PSU’s or Private Corporations.
  • Offer extensive range of tenure up to 15 years.
  • Compared to Government Securities, corporate bonds carry higher risks which depend upon the corporation, the industry where the corporation is currently operating, current market conditions and the rating of the corporation.
  • Some Corporate bonds:

Straight Bonds-Pays fixed periodic (usually semi-annual) coupon over life and returns principal on maturity date.

Floating Rate Bonds- Pays interest rate that is linked to a benchmark rate

Convertible Bonds- Give the bond holder the right (option) to convert them to equity shares on certain terms

Callable Bonds- Give the issuer the right (option) to redeem them prematurely on certain terms

Puttable Bonds- Give the investor the right to prematurely sell them back to issuer on certain terms.

Commodity Linked Bonds- The pay off from these bonds depends to a certain extent on the price of a certain commodity.

Zero Coupon Bonds- Does not carry any regular interest payment. Issued at deep discount over its face value and redeemed at face value on maturity.

  • Certificate of Deposits:
  • Certificate of Deposits (CDs), which usually offer higher returns than Bank Term deposits, are issued in demat form.
  • Banks can offer CDs which have maturity between 7 days and 1 year.
  • CDs from Financial Institutions have maturity between 1 and 3 years.
  • Commercial Papers:
  • Commercial paper is a money market security issued (sold) by large corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation’s promise to pay the face amount on the maturity date specified on the note.
  • These are short term securities with maturity of 7 to 365 days.

HOW DOES A BOND WORK?

  • If you buy a bond with a face value of Rs1,000, a coupon of 8%, and a maturity of 10 years. This means you’ll receive a total of Rs80 (Rs1,000*8%) of interest per year for the next 10 years. Actually, because most bonds pay interest semi-annually, you’ll receive two payments of Rs40 a year for 10 years. When the bond matures after a decade, you’ll get your Rs1,000 back

WHAT ARE THE RISKS IN BONDS?

  • Bond default risk is usually termed as Credit Risk.
  • Many rating agencies like CRISIL, ICRA and CARE provide financial information on firms and quality ratings of bond houses.
  • Junk bondsare bonds with high default risk and are poorly rated, but these investors demand such bonds as in lieu of high risk; they offer better yields.

So, now you know all about bonds!!