In addition to tax benefits and liquidity, a salaried person is always looking for yields that provide him with protection. There are some best investment options for a salaried person.
KTDFC Fixed Deposits
If you are a salaried person and have managed to save some cash, then you can opt for the Kerala Transport Development Finance Corporation deposit. It offers you an interest rate of 8.25% over the tenure of 1, 2 and 3 years. If you look at the holding period for the short to medium term, it is quite good. A deposit payment has been ensured by the Government of Kerala, making it another excellent investment option. The only trouble is that you may need to fill in the online form as there are no agents you can contact. However, the interest earned is subject to taxation.
Public Provident Fund
Public Provident Fund provides an excellent option to the salaried person. This is because the interest earned is exempt from tax and it also gives you tax benefit under section 80C. As per this section, for the amount invested, you get a tax benefit of Rs 1.5 lakh. Currently, the rate of interest earned is 7.9%; it is not bad at all. The only concern is the maturity period of 15 years, although you can avail of the loan after the third financial year. This is a good scheme for those looking for low risk and more tax-free returns, but not too much liquidity. Every year you can invest just as low as Rs 500.
SIPs of Mutual Funds
This is an offer that has unexpectedly captured investors’ fans. In the systematic investment plans (SIPs) of mutual funds, many investors are now systematically investing small amounts. However, they are running based on the heavy yields that have been made available in the previous year. Future returns may be minimal, so expectations have to be lowered. For example, in three years, some equity schemes failed to yield, while in 5 years they gave reasonable yields. For the security aspect, it cannot be ensured like PPF, so if you are a conservative investor, you can leave it.
Recurring deposits have the issue of offering very low-interest rates. RD is also taxable, meaning that if you are in the higher or highest tax bracket, you end up with very little time. Other alternative investments would be a better proposition. That said, one benefit of recurring deposits is that it provides you with excellent liquidity. Before investing, one should compare interest rates and look for online possibilities. Another advantage is that recurring deposits can be used for future expenses such as travel, marriage, etc. in a prescribed manner.
If you are a salaried person and you need to diversify your threat, then it is the best investment option for a salaried person to invest in gold. For example, if you have invested all your cash in equity and if there is a shortfall in equity, you may lose significant money. The right way would be to look at gold as a measure of diversification. Another reason to invest in gold is to look for opportunities like marriage, anniversary, etc. to meet the demand for gold. In the past few years, however, gold returns have fallen drastically. Do not expect much more from gold.