ASSIGNMENT-1 Hypothetical situations where the investments in mentioned avenues are made are mentioned below: 1. NSC (National Savings Certificate) - Building a Secure Nest Egg: Mr. and Mrs. Sharma, a young couple, were planning for their future financial security. They decided to invest ₹10,000 in NSC in 2023, taking advantage of the attractive 7.7% interest rate. They appreciated the fact that there was no maximum limit for investment, allowing them to allocate a substantial amount towards their long-term goals. With the tax benefits under Section 80C, they could also save on taxes while growing their wealth. After 5 years, in 2028, they received the maturity amount of ₹13,547. The Sharmas were delighted to have a secure nest egg to support their dreams of buying a house and planning for their children's education. 2. PPF (Public Provident Fund) - Securing the Future for Little Riya: Mr. Singh, a loving father, wanted to secure his daughter Riya's future. He opened a PPF account in Riya's name in 2023, when she was just 2 years old. He started with a minimum investment of ₹500 and committed to contributing the maximum allowed ₹1.5 lakh each year. The consistent 7.1% interest rate, tax-free returns under Section 80C, and the flexibility of a 15-year maturity period made PPF an ideal investment choice. By the time Riya turned 18, in 2039, her PPF account had grown significantly, providing her with a strong financial foundation for her higher education and other life goals. 3. Sukanya Samridhi Yojana - Empowering the Next Generation: Mrs. Patel, a forward-thinking mother, wanted to empower her daughter Meera with financial independence. In 2023, when Meera was 6 years old, Mrs. Patel opened a Sukanya Samridhi Yojana account in her name. She invested ₹1,50,000 each year to maximize the tax benefits and took advantage of the current 8% interest rate. Mrs. Patel loved the idea that the account would mature when Meera turned 27, giving her the financial freedom to pursue her dreams and aspirations. She felt proud of her decision to invest in Meera's future. 4. Senior Citizen Saving Scheme (SCSS) - A Comfortable Retirement for Mr. Verma: Mr. Verma, a retiree aged 65, wanted to make the most of his savings to live a comfortable retired life. He decided to invest ₹2,50,000 in the Senior Citizen Saving Scheme in 2023, taking advantage of the lucrative 8.2% interest rate. With the 5-year maturity period, Mr. Verma knew he could extend the scheme for another 5 years if needed. The tax benefit of up to ₹1.5 lakh under Section 80C helped him optimize his tax liabilities. The steady interest income from SCSS allowed him to lead a financially stress-free and enjoyable retirement. 5. Post Office Term deposits - Short-term Savings for Mrs. Rao: Mrs. Rao, a cautious investor, had some surplus funds that she wanted to invest for short-term gains. She decided to put ₹10,000 each in two different Post Office Term Deposits: one for 2 years at a 7.0% interest rate and another for 3 years at a 7.0% interest rate. The flexibility of choosing different tenures appealed to her, allowing her to have access to funds at different intervals. After the maturity period, Mrs. Rao received her principal amount along with interest, which she reinvested to continue growing her savings. 6. KVP (Kisan Vikas Patra) - A Long-term Plan for Mr. Kapoor: Mr. Kapoor, a middle-aged professional, wanted to save for his daughter's wedding in about 10 years. He decided to invest ₹50,000 in KVP in 2023, attracted by the 7.5% interest rate. With the doubling maturity period of 115 months (9 years 7 months), Mr. Kapoor knew he could have a sizeable amount by the time his daughter's wedding approached. While there were no tax benefits, he appreciated the simplicity and reliability of KVP as a long-term investment option. Fixed Term Deposits Schemes Investment Options Requirements Interest Rates Tax Benefits Maturity Period NSC (National Savings Certificate) Multiples of ₹100 or ₹1000 6.8% (2020) / 7.7% (2023) Claim up to ₹1.5 lakh under Section 80C 5 years PPF (Public Provident Fund) Minimum ₹500, Maximum ₹1.5 lakh per year 7.1% (consistent) Tax-free returns under Section 80C 15 years (extendable in blocks of 5 years) Sukanya Samridhi Yojana Minimum ₹250, Maximum ₹1.5 lakh per year, Account in the name of a girl child aged 0-10 years 7.6% (2015) / 8% (current) Tax benefit under Section 80C, tax-free returns Matures after 21 years from opening or upon marriage Senior Citizen Saving Scheme (SCSS) Age 60 years or above, or age 55-60 (retirees) 8.2% Tax benefit up to ₹1.5 lakh under Section 80C 5 years (extendable once) Post Office Term deposits Multiples of ₹1,000 6.9% (1 year) / 7.0% (2 years) / 7.0% (3 years) / 7.5% (5 years) Interest taxable above ₹40,000 per year 1 year / 2 years / 3 years / 5 years KVP (Kisan Vikas Patra) Multiples of ₹1,000 7.5% No tax benefits Doubles in 115 months (9 years 7 months) Comparison Between Public Bank FD and Private Bank FD Features State Bank of India (SBI) Fixed Deposit HDFC Bank Fixed Deposit Tenure Options 7 days to 10 years 7 days to 10 years Interest Rates Competitive and subject to periodic revisions Competitive and subject to market conditions Minimum Investment Typically starts from ₹1,000 Generally starts from ₹5,000 Tax Benefits Tax-saving FDs available under Section 80C No specific tax-saving FDs, regular FD interest may be taxable Senior Citizen FDs Available with special interest rates Available with special interest rates Premature Withdrawal Possible with penalties or reduced interest rates Possible with penalties or reduced interest rates Additional Benefits - Wide network and accessibility - Strong customer service and product offerings - Trust of a prominent public sector bank - Leading private sector bank in India 7 days to 45 days: For General Public - 3.00 per cent; For Senior Citizens - 3.50 per cent Interest Rates 46 days to 179 days: For General Public 4.50 per cent; For Senior Citizens - 5.00 per cent 180 days to 210 days: For General Public 5.25 per cent; For Senior Citizens - 5.75 per cent 211 days to less than 1 years: For General Public - 5.75 per cent; For Senior Citizens 6.25 per cent 1 year to less than 2 years: For General Public - 6.80 per cent; For Senior Citizens 7.30 per cent 2 years to less than 3 years: For General Public - 7.00 per cent; For Senior Citizens 7.50 per cent 3 years to less than 5 year: For General Public - 6.50 per cent; For Senior Citizens 7.00 per cent 5 years to up to 10 years: For General Public - 6.50 per cent; For Senior Citizens 7.50 per cent. 7 days to 14 days: For General Public - 3.00 per cent; For Senior Citizens - 3.50 per cent 15 days to 29 days: For General Public - 3.00 per cent; For Senior Citizens - 3.50 per cent 30 days to 45 days: For General Public - 3.50 per cent; For Senior Citizens - 4.00 per cent 46 days to 60 days: For General Public - 4.50 per cent; For Senior Citizens - 5.00 per cent 61 days to 89 days: For General Public - 4.50 per cent; For Senior Citizens - 5.00 per cent 90 days to less than equal to 6 months: For General Public - 4.50 per cent; For Senior Citizens - 5.00 per cent 6 months 1 day to less than 9 months: For General Public - 5.75 per cent; For Senior Citizens - 6.25 per cent 9 months 1 day to less than 1 year: For General Public - 6.00 per cent; For Senior Citizens - 6.50 per cent 1 Year to less than 15 months: For General Public 6.60 per cent; For Senior Citizens - 7.10 per cent 15 months to less than 18 months: For General Public - 7.10 per cent; For Senior Citizens - 7.60 per cent 18 months 1 day to less than 21 months: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent 21 months to 2 years: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent 2 years 1 day to 2 years 11 months: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent 2 years 11 months 1 day to up to 3 years: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent 3 years 1 day to 4 years 7 months: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent 4 years 7 months to 55 months: For General Public 7.25 per cent; For Senior Citizens - 7.75 per cent 5 years 1 day to 10 years: For General Public - 7.00 per cent; For Senior Citizens - 7.50 per cent. Mutual funds 1. Liquid Mutual Fund: A liquid mutual fund is a type of debt mutual fund that invests in short-term, high-quality money market instruments like Treasury Bills, Commercial Papers, Certificate of Deposits, and short-term government securities. These funds are designed for investors seeking a safe and highly liquid investment option with minimal risk. The investment horizon for liquid funds is usually a few days to a few weeks. They are ideal for parking surplus funds or for meeting shortterm financial goals. 2. Ultra Short-Term Mutual Fund: Ultra short-term mutual funds are also a type of debt mutual fund that invests in slightly longer-term debt instruments compared to liquid funds. These funds have a slightly higher average maturity and carry slightly more risk. They still focus on high-quality debt instruments but may provide slightly higher returns. The investment horizon for ultra short-term funds is typically a few weeks to a few months. 3. Income Funds: Income funds are debt mutual funds that invest in a diversified portfolio of debt securities, including government bonds, corporate bonds, and other fixed-income instruments. These funds aim to generate a steady stream of income for investors while maintaining a moderate level of risk. Income funds are suitable for investors seeking regular income and are willing to take on a bit more risk than liquid or ultra short-term funds. 4. Growth Funds Mutual Fund: Growth funds, also known as equity growth funds or growth-oriented funds, are a type of mutual fund that primarily invests in equity and equity-related securities. The objective of these funds is to provide capital appreciation over the long term. Growth funds invest in stocks of companies with high growth potential and aim to maximize returns. These funds are suitable for investors with a higher risk appetite and a long-term investment horizon. 5. Balanced Mutual Funds: Balanced mutual funds, also known as hybrid funds, are a combination of both equity and debt instruments. These funds aim to balance the risk-return profile by diversifying across asset classes. They typically invest in a mix of stocks and bonds, and the allocation may vary based on the fund's investment strategy. Balanced funds are suitable for investors seeking a balanced approach, moderate risk, and potential for both capital appreciation and regular income.
