High Interest Rates

Liquid Fund v/s Short Term Fixed Deposits

December 19, 2010 @ 1:43 am · Filed under Earn High Interest

These are two instruments which are used to earn some interest on money lying idle in bank or money which has been set aside for a purpose.

We understand what are fixed deposit what many investors are not aware of is liquid fund

Well Liquid fund as the name suggests are Mutual Fund Schemes keep our money liquid [almost cash]

These liquid funds are debt funds that work in money market instruments [It is a market for short term borrowing and lending. Overnight, two day, ten day, a month paper is what is bought and sold.]

For ease of understanding we will compare two products in each category.

Two things come in to play while comparing the two product categories:

1. Return on Investments

2. Tax Treatment

1. Return on Investments

Fixed Deposit

A Fixed Deposit will give a known rate of interest for a known period. So say a 61 – 90 days fixed deposit in HDFC Bank will fetch you a return of 5.5% for a senior citizen.

Liquid Fund

A Liquid Fund the rate of return is not known in advance instead it fluctuates based on the NAV .However the risk is minimal and the typical return for a decent Liquid fund would range from 5-7% .For example the DSP ML Liquid Plus Regular Fund has given one year return of 8.67%

2. Tax Treatment

Fixed Deposit

The interest on Fixed deposit is taxed by adding it to the assesses income .Hence if you belong to the highest tax bracket you will be taxed at 30%, thus wiping out a huge chunk of return.

Liquid Fund

A Liquid Fund has an advantage here if you opt for a dividend option the dividend is tax free in the hands of the investor thats right.NO TAX for you. In some schemes like the HDFC AMCs Treasury plan you get daily dividend on the investment made thus giving you the freedom to remove money on any day you need it.

Conclusion:

While the fixed deposit scores in terms of reliability of return .Liquid fund scores on the liquidity, rate of return and tax treatment. Presha Investments recommends liquid funds for those who are income tax assesses & need to park funds for shorter tenures

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What do I need to know about Buying/Selling a home in New Jersey to a relative?

December 7, 2010 @ 6:02 pm · Filed under Buying & Selling

Kevin M asked:

I am buying my parent’s house and we are selling our house to my wife’s brother. I have heard there are some tax exemptions when making a sale to a relative. Also our realtor has said that for $2500 they can handle all the paperwork, since they won’t be getting a commission on either sale. Just wondering if the work would be worth $2500.

Thanks

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Why Most People Bank on Term Deposit Interest Rates

November 26, 2010 @ 5:29 pm · Filed under Earn High Interest

Some investors study the scheme or the investment policies before deciding whether to invest or not. They assiduously study the policy’s terms and conditions, the interest it would fetch, and the maturity time before affirming the policy. But, many people don’t really have the time or the knowledge to find out the right policy. Few others don’t want to hire a broker or a finance expert. So, the safest option to get assured income, high interest rates, and money without much hassles, is through term deposit interest rates.

Finance experts opine that term deposit interest rates are not the only way to earn money through savings. There are bonds, lucrative debentures, stocks, and shares to meet the demand. However, term deposit interest rates still score more in popularity with the general mass. Here are few reasons why it is so very lucrative.

Money for the Future

There are many reasons why a salaried family person would chose term deposit rates for earning extra money through savings. Suppose a person has a plan to buy a limousine car or a duplex apartment in a posh locality after retirement, he can choose a term deposit which is secured yet a high yielding one.

Term deposit interest rates are high than other bank deposit schemes. And, they don’t allow customers to withdraw money from the term deposit account till the policy expires. But, salaried people don’t require savings on a daily basis. They could plan out their family finances by investing the saved money on bank deposits and get high term deposit interest rates. The principle amount would be used later when the policy expires.

Home Loans and Security

Often, banks offer home or car loans based on some interest rate. The security that is pledged by the customers is often the principle amount for the term deposit. Although the term deposit interest rates are not affected by the security pledged by the customer, it would be withheld if the loan is repaid by him.

Cashing on Savers Market

The market has always fluctuated and always would be fluctuating in the near future as well. Sometimes it is upbeat and the interest rates are high. Sometimes the reverse is the order of the day. A thoughtful investor would invest money to get the maximum benefit of term deposit interest rates. When the interest rates have gone down for instance, the investor should not further invest on term deposit but do so if the market is upbeat.

The duration of the term and the amount depends on how much term deposit interest rates you would get for your investment. Related to swap rates, term deposit interest rates can increase enormously during a saver’s market. Investors should cash on these occasions to invest on term deposits.

Less Tax Burden and Less Risk

Majority of the investors don’t think about the rate of interest for a term deposit. Rather, they try to invest on policies which have less hassles to bear, less tax to pay, and less risks to experience. People choose term deposit interest rates that are not very high against heavy tax payment and risky endeavors.

Although, you cannot transfer the term deposit from one bank to another, you can secure the interest to your current account from time to time. So, if you wish to have a stress-free finance scheme with high earnings as well, term deposit interest rates are the best ones for you.

How to Find Insurance Quotes on the Internet

November 21, 2010 @ 8:48 am · Filed under Insurance

When people buy a new car and decide to try it on the road, the first thing they want to do before that is to get the car insured. High risk auto insurance becomes really essential. It is a very good thing to do as it can save you a lot of money in case anything wrong happens or if your car gets stolen. But before you buy any insurance, it is important to look for different options and to be aware of all the different terms and policies which the car insurance companies may be having. This decision cannot be taken if a person has only seen or gone though just a handful of insurance quotes.

Every person wants the policy which is best suited to his needs and one which is not very heavy for his pocket. Keeping this in mind, finding a good car insurance quote which satisfies all the needs can be a really tough thing for most people. It requires a little patience and thorough search. People are so busy with other things that the idea of going from one company to another to find out about various quotes seems to be a waste of time. Luckily for such people, they can find free auto insurance quotes on many websites on the internet.

But before a person starts to look for such insurance quotes on the internet, he has to keep in mind a few things and should be prepared with a couple of things. He should keep his driver’s license and plate number along with his vehicle identification nearby as they can be asked for any time. If that person currently has any type of auto insurance then he may be asked to provide information about that policy which he has. Once he has all this information with him, he can go on and search for various free quotes online. Once you are doing this, try to give it as much time as possible, and look for a lot of different quotes of different companies. The more options you have the more chances of you finding the policy or quotes which suits your needs perfectly.

After you have all the required information with you, you can fill the various forms which are available on different websites. They would ask you to provide them all the information that you have, and also ask what exactly you want from a policy, and according to that they would give their results which according to them would be the best policies for you. This way finding an insurance quote online can turn out to be a really easy process.

Causes Of Inflation

November 17, 2010 @ 8:59 am · Filed under Economics

Causes of Inflation

By definition, inflation is a sustained rise in prices of commodities, which leads to a decrease in the purchasing power of a nation. Even though inflation is an imminent part of the normal economic status of any country in the world, increases above a certain level are always an issue. The factors, both internal and external, that cause these increases need to be identified because economic performance is affected by high levels of inflation. These factors include rises in production and labor costs, high lending levels, unfavorable exchange rates, high taxes, wars or the government printing more money.

There are many available theories about what really causes inflation. Nonetheless, economists worldwide agree on one thing: economic inflation may be the result of an increase in the money supply or by a decrease in the quantity of goods that are supplied.

Among the theories out there, we have the Demand Pull theory and the Cost Push theory. The first one refers to the fact that due to excessive demand of the supplies available, prices rise. The more money there is in circulation at a certain point, in conformity with the economys ability to supply, the more the prices increase. Therefore, we are face to face with a situation in which there is too much money chasing too few goods. Declining interest rates, cuts in tax rates or increased consumer confidence may also result in an increase in demand.

On the other hand, the second theory, the Cost Push one, explains the fact that inflation appears when the cost of production rises and the increase is passed on to consumers. Production costs may rise with labor costs. But there is another situation: when the firm that produces the goods is a monopoly or an oligopoly and raises prices, imported raw material costs more because of exchange rate changes. External factors include natural disasters or a countrys increase in economic power.

Higher production costs may also be caused by an increase in indirect taxes. The oil crisis from the 1970s is a classic example of cost-push or supply-shock inflation, since the US had inflation levels that went up to two digits. This leads to rises in prices of all commodities, because oil is used in every industry. Since global prices in oil, food, steel and other commodities are rising by the minute, inflation is considered one of the major concerns in 2008.

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