Prashant Sawant 9820408795 Mumbai.. When did RBI nationalised ?  1946  1935  1949  1936.

Slides:



Advertisements
Similar presentations
Where Your Money Is Protected From Loss. Backyard, Mattress, & Other Safe Money Places Safe Money Places Certificates of Deposit Fixed Annuities Money.
Advertisements

Investme nt. What is Investment? Money you earn is partly spent and the rest saved for meeting futures expenses.
True/False Credit unions do not provide insurance for their depositor’s savings.
Warmup Why does the dollar on the left have value, while the one on the right does not? What is money? Define Salary? How does it differ from other types.
Wealth Creation for you and your Customers via SIP’s.
Saving and Investing.  Always pay yourself first!  All little can go a long way  Don’t save your money under your mattress! (and other savings mistakes.
Savings and Investing.
Warmup Why does the dollar on the left have value, while the one on the right does not?
Sources of Business Finance
CHAPTER 10.1 MONEY Three uses of $ 6 Characteristics of $ Source of $’s value MONEY Three uses of $ 6 Characteristics of $ Source of $’s value.
Ch 4. Time Value of Money Goal:
Unit 5 Microeconomics: Money and Finance Chapters 10.3 Economics Mr. Biggs.
Investing 101. Types of Savings tools Savings Account: An interest-bearing account (passbook or statement) at a financial institution. Certificates of.
What Do Interest Rates Mean? Copyright © 2009 Pearson Prentice Hall. All rights reserved. 3-1 Debt markets, or bond markets, allow governments (government.
 How to Manage Your Cash › Daily Cash Needs  Lunch, movies, gas, or paying for other activities  Carry cash  Go to an ATM  Credit Card  Know pros.
Loans and Advances The term ‘loan’ refers to the amount borrowed by one person from another The amount is in the nature of loan and refers to the sum paid.
 MBA 7 EPF  Prashant S Sawant. EPF  PPF available to all, even minors.  EPF available only to salaried employees  PPF is voluntary, EPF is mandatory.
Saving For the Future.  Why should we save? To provide for future needs. Both expected and unexpected. What might happen if you do not set something.
Spending, Saving, & Investment UNIT 8: PERSONAL FINANCE (1)
CHAPTER 8 SAVING Plan for Financial Security
 MBA 7 PPF  Prashant S Sawant. PPF act 1968  Public Provident Fund  GOI wanted people to have some money for their old age.  The scheme is attractive.
Bank & Insurance Ms. Cichon Rosholt High School. Financial Institutions Commercial Bank: Financial institution that offers a wide variety of banking services.
Chapter 4 Money Management Managing Checking and Savings Accounts –Checking and savings accounts are the foundation of financial asset management –Cash.
Savings and Investing. Key Terms Saving Investing Deposit Withdrawal Interest Interest rate Account balance Compounding of interest Future value Present.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Types of deposit accounts Saving deposit;- Savings deposit account is meant for individuals who wish to deposit small amounts out of their current income.
Welcome.
Sources of Finance Manoj Kumar kumaratvuc.wordpress.com.
Chapter 30 Savings Accounts pp
Copyright © 2008 Pearson Education Canada 6-1 Defined-contribution Pension Plans The reverse of defined-benefit plans Contribution is known up-front The.
MBA 3 Aggression Innovation Integrity Prashant Sawant Mumbai.
 MBA 6 / SCSS  Prashant S Sawant. SCSS  Senior citizen savings scheme  Do not regret growing older. It’s a privilege denied to many.  Aug 2004, GOI.
Chapter 8 Savings. Essential Questions What is the purpose of a savings plan? What needs to be considered when considering where to save your money What.
Review Basic Accounting. Fundamentals Assets are anything the business owns that has a dollar value (debit balance on the “T-accounts”) Liabilities are.
Investing Opportunities Using Investment Opportunities as a Means to Increase Individual Wealth.
5.1 Savings and Investing 5.2 The Rule of 72 Getting Started.
Investments Who wants to be a millionaire?. What kind of an investor are you?  Rate all investment options according to three characteristics:  Safety.
Why It’s Important Savings accounts allow you to put money aside and help make your money grow.
Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents.
Banking Services: Savings Plans and Payment Accounts
Investment Options & The Best One By- Suyog ( CSS, Cash)
Sources of finance Long term finance Short term finance.
Let’s Do the Math! Maximizing your Return. Opportunity Cost The value of the next alternative when making a decision If I did (bought) A instead of B,
Financial Markets Investing: Chapter 11.
Private Mortgage Lending How You Can Securely Earn Double-Digit Interest Rate.
Chapter 21 10/11/ Banking & Credit. Saving Money 10/11/ Ways to save Credit union non-profit financial institution similar to a bank Passbook.
CH # 7 BANKING. Terms to know Definition of BANK 1 Kinds of BANK 2 Functions of central and commercial BANKS 3 Credit creation 4.
Certificate for Introduction to Securities & Investment (Cert.ISI) Unit 1  More on bonds  Calculating yields 30cis Lesson 30:
FUNCTIONS OF COMMERCIAL BANKING
New Issue Market Submitted to: Rutvi Mam Submitted by: Ashish Sakariya.
Tax Saving Investments A Guide To The Instruments That Can Help You Achieve The Goal Of Low Risk And High Capital Gains PREPARED BY: CA. JIMMIT D MEHTA.
Savings Accounts Chapter 30. Today’s Schedule Yesterday’s Quiz Review Homework Collection No Homework – Enjoy your break Chapter 30 Quiz.
Investment, Credit, and Interest BBI2O. Recap: types of investments Investment options vary according to risk and return  Risk: how “safe” is your investment.
Alli Watkins. What are bonds? Bonds are like loans, where you are the lender and the government or big companies is the borrower. They are NOT INSURED.
 Saving and investing basics  Saving and investing options  Evaluation factors for savings and investing options.
money you have in a bank either in checking (where you can use the money with an ATM card or by writing a check) or savings (where you earn interest)
Managing Your Money Chapter 23.
Today’s Schedule – 11/28 PPT: Money Supply & Banking Rdg: Pitfalls of Credit Card Debt Bonus Quiz: Money HW: Read 17.2/17.3 Start Studying for Unit 5 Test.
 Explain what it means to budget, and identify reasons to maintain a budget.  Create and maintain a budget that supports personal and financial goals.
Spending, Saving, and Investing. Rational Decisions and Financial Planning Economist assume that, given enough information, most people are rational and.
Money Markets Introduction to Money Markets. Agenda In this session, you will learn about: Features of the Money Market Functions of the Money Market.
Page 1 Financial Institutions and Investments. Page 2.
How Does Money Grow Over Time? The Stock Market.
INVESTMENT ALTERNATIVES Chapter 2. ALTERNATIVES IN INVESTMENTS Investment avenues are the outlets of funds. There are varieties of investment avenues.
Chapter 32 Saving and Investing Introduction to Business Spring 2005.
Chapter 14. Banking  Do Now  What do you think banks will be like in 15 years?
 Explain what it means to budget, and identify reasons to maintain a budget.  Create and maintain a budget that supports personal and financial goals.
Powered by PPF CALCULATION Powered by
Unit 5 - Personal Finance #
What is Tax Saving Fixed Deposit?
Presentation transcript:

Prashant Sawant Mumbai.

When did RBI nationalised ?  1946  1935  1949  1936

Asset Classes  Equity  Debt/ Fixed Income  Gold

Asset Classes  Equity 1. Stocks 2. MF I. Domestic : Large cap, Mid cap, Small cap II. International Market Capitalisation = Current Stock Price x Number of Shares outstanding. $ 50 bn – 200 bn – 3500 bn

Asset Classes  Debt / Fixed Income 1. Debt MFs ( Issuer, Duration, Credit Quality) 2. Bank FDs 3. Post Office Instruments # Issuer : Gilt ( Bank of England had gilt(smooth) edge) Corporate

Asset Classes  Gold 1. Gold ETF ( Exchange traded fund) Gold & related companies 2. Gold Funds 3. Jewellery

Asset class selection criteria  Short term  Car down payment, holiday  Asset class ???  Medium term  House down payment  Asset class ???  Long term  Children’s education/marriage, Retirement  Asset class ???

FDs & RDs  Fixed & Recurring deposits : Concept, Types of Deposits ( Flexible FD, Savings plus, Deposit with OD facility, RDs with banks/ Post Offices), How to invest, Points to consider before investing, Advantages, Disadvantages, Investment meter, Tax impact.

The FD concept  You deposit a lump sum of money ( ? ) in the bank at a certain ROI for a fixed period of time.  The bank returns the principal & interest earned, either at the end or at regular intervals.  ROI & tenure are fixed at the start : FMP  ROI remains constant during the entire tenure irrespective of the movement in the market ROI.  FD also known as Term deposits/ Time deposits as in Canada, Australia, N Zealand & US. Bond in UK.  FDs are safe ?  DICGC  Deposit Insurance Credit Guarantee Corporation

FD Concept  Why FD offers more ROI than saving ac ?  Liquidity  Simple FD : Interest paid every 3 months in the savers ac or by cheque.  Compound interest FD/ Cumulative FD : Maturity paid with principal & interest.  Quiz : FD made at 9% for 5 yrs. Customer is withdrawing after 2 yrs when the ROI has gone down to 8%. Customer will be paid what ROI ?  Quiz : Is there a penalty for pre-mature withdrawal ?  Yes, max 1%. Differs from bank to bank.  Quiz : FD receipt is called ?  FDR  Quiz : Auto renewal of FD possible ?  Quiz : Can FD maturity amount be paid in cash ?  Only upto 20k as per RBI guidelines. ( ac payee crossed chq/ ac transfer )

Types of FDs  Flexible FD : Can withdraw part of the deposit before maturity, Remaining amount will continue to grow at same ROI.  Savings plus account : If you keep surplus cash in your savings ac, you can ask the bank to move a certain amt into FD for a period of your or bank’s choice.  Deposit with OD : FD Rs 1L, bank will transfer an amt upto 75-80% to your savings ac. The FD will earn the same interest. You need to repay the amount in installments, along with some additional interest, before the expiry of the FD.  These facilities may/may not be offered by all banks/all same bank branches.

Quiz  If you invest Rs 10k in FD at 10% for 5 years, then what is the maturity amount ?  15000/-  16105/-

FD  Can customer take loan against FD ?  Yes, upto 80-90% of principal.  Quiz : ROI on loan will be higher/lower than the ROI for FD ?  Quiz : FDs are taxable ?  If interest goes above Rs 10k in one bank in financial year.  Quiz : of _____ ?  10%, Interest.  Quiz : Bank issues which form for TDS ?  Form 16A  If any tax is due after TDS, holder has to declare it in his returns & pay tax as per his IT slabs.  Form 15 G : < 60 yrs, if total income under tax limits.  Form 15H : > 60 yrs, if total income under tax limits.  Quiz : TDS is applicable for RDs ?

FD Information  Most banks calculate interest on quarterly basis.  This decides the effective annual ROI.  FD durations allowed in India ?  7 days to 10 years  Amount of FD ?  Rs 100/- to unlimited ( with some banks only)  As all the banks are under RBI, all of them have to offer the same ROI for same durations ?  Senior citizens get some % higher ROI, why ?  No penalty on premature withdrawal.

FD u/s 80c ?  5 yr FD >>> 80c  Limitations :  No part withdrawal facility  No loan facility

FD = Cumulative FD  Cumulative FD : Interest calculated & added, monthly, quarterly etc.  Interest is paid every month & principal returned at the end. Will the interest earned in this way be more/less than cumulative FDs ?

How to invest ? …..  Can open FD in any bank  Submit KYC documents. Which are those ?  Photo, Proof of identity, Address proof.  If you have online ac, can open FD online also.  Min deposit Rs __/- but can vary bank to bank.  RS 100.  Quiz : Is it better to make one FD of big amt or various smaller FDs ? Why ?  Liquidity & DICGC

Points to consider before investing  Check & compare ROIs of various banks  Check the penalty for pre-mature withdrawal & compare with other banks.  Is the bank close to your residence/office ?

Advantages  Safe & reliable way to grow your money.  ROI is normally higher than inflation rate.  Surplus cash in savings ac can be automatically be moved to FD.  Interest is compounded.  Senior citizens are offered higher ROI.  Highly liquid. Can get back the amount immediately.  Can get loan against FD.  DICGC ( Rs 1 L, principal & interest)  Have joint ac for DICGC ( Anil, Bina & Bina, Anil)  Can spread FD in multiple banks for DICGC.

Disadvantages  Rising inflation can give you negative ROI.  Quiz : FD at 8%, inflation 6%. At maturity, inflation at 9%, what real ROI you will get ?  Money locked for a long time.  Interest above Rs 10k is taxed at source.  Penalty on pre-mature withdrawal.

FD Investment Meter ( 5 star highest)  Safety  ****  Liquidity  ****  Returns  ***

Tax impact  TDS after Rs 10k  TDS is branch specific & not bank specific.  IF CBS is implemented, above is not possible.  TDS if you have not submitted PAN.  Banks report TDS to IT dept.  Notice by IT, if disclosures on FDs not made.

RD : “Recurring Deposit” concept  Test of patience, discipline & sacrifice.  Opportunity to build up savings through regular monthly deposits of fixed sum over a fixed period of time.  Standing instruction to bank  Interest compounded quarterly.  Delay in payment will affect the maturity value.  Loans up to 80-90% of deposit value.  TDS not applicable.  Quiz : Is interest earned through RD is tax free ?

RD at 8% for 2 yrs Investment pm (Rs)Amount on maturity 500/ / / /-52183

Types of RD  Flexible RD  Instead of fixed amount, 10 X can be invested.  RD at bank & Post offices  RD at PO term fixed at 5 yrs, bank any duration.  PO ROI is fixed, bank ROI varies as per tenure.  Premature withdrawal, PO pays principal with current banks levy max 1% penalty.

How to invest in RD  Any bank in India  Min RD in bank Rs 100/-pm  Min RD in post office Rs 10/- pm  Duration Bank : Min 6 months, max 5 Yrs.  Bank issues passbook which gives details of deposits, duration selected & maturity amount.  Monthly deposit date can be selected.

Points to consider before investing  ROI offered & comparison with other banks.  Penalty on premature closure  Check if bank offers insurance/loans on RD.

Advantages  Opening a RD is simple & easy.  RD offers similar returns as of FD.  The discipline of savings.  Banks offer multiple facilities like loans, insurance, OD etc.  RD is as safe as FD.

Disadvantages  ROI is generally just above the inflation rate.  If standing instruction facility is not available with the bank/PO, one has to visit them every month.  No IT benefits.

RD Investment Meter ( 5 star highest)  Safety  ****  Liquidity  ****  Returns  ***

Tax Impact  Interest from RD is not tax free.  It is considered as a part of your income & taxed accordingly.  TDS is not deducted even if the interest amount exceeds Rs ______ as in FDs.  Rs 10k

Base Rate  Effective from 1 st July 2010.(Replaced BPLR)  Rate below which a bank cannot lend except in cases allowed by RBI.  Transparent system  One base rate for each bank ( reviewed quarterly ), declared publically.  Following categories of loans could be priced without reference to base rate : 1. DRI advances 2. Loans to bank’s own employees including retired employees 3. Loans to bank’s depositors against their own deposits.

DRI : Social banking  Differential rate of interest( 1972).  Concessional to eligible beneficiaries like families with annual income of Rs 18000/- (rural) & Rs 24000/- (urban).  Only to borrowers not under any other govt subsidy scheme.  Limit of Rs 15k. For HL, limit is Rs 20k.  No margin money required. No collateral reqd.  Repayment in 5 yrs max ( including 2 yrs grace period).  Atleast 40% loans to SC/ST.  Min 1% of loans should be DRI….  Banks can lend to NGOs who in tern lends ahead.

 Thank you.  Prashant Sawant   Global training group