Returns: The gain or loss on an investment over a period of time, usually expressed as a percentage of the initial investment. In simple terms it can be stated as the profit or loss generated from an investment.
Risk: The potential for an investment to lose value. The higher the risk, the greater the potential for loss but also the potential for higher returns. Layman language can be stated as The possibility of losing money or not making expected gains due to uncertainties or fluctuations in the market.
Lock-in period: The time period during which an investor is not allowed to withdraw or sell their investment. The lock-in period is implemented to ensure that the investment remains committed for a certain minimum time and helps in managing risk for the investor and the investment company. Simply we can say that lcok in period is a specified period of time during which an investment cannot be sold or redeemed.
ELSS (Equity-Linked Saving Scheme) is a type of mutual fund in India that invests primarily in equity and equity-related instruments. ELSS has a tax benefit for the investor under Section 80C of the Income Tax Act. ELSS also has a lock-in period of 3 years, after which the investment can be redeemed. It has a high potential for returns, but also carries a higher level of risk compared to debt funds.
NSC (National Savings Certificate) is a savings bond offered by the Government of India, primarily to promote small savings. It is a fixed income investment instrument with a maturity period of 5 or 10 years. Interest on NSC is compounded on a half-yearly basis and is taxed as per the investor's tax slab. NSC also offers tax benefits under Section 80C of the Income Tax Act. The investment in NSC is safe, but it offers lower returns compared to other investment options.
NPS (National Pension System) is a defined contribution pension scheme launched by the Government of India for all citizens of India. It is designed to provide pension coverage for all citizens and to inculcate the habit of saving for old age. In NPS, the investor contributes to their pension account during their working life, and the accumulated savings are used to purchase an annuity at retirement to provide a regular pension income. The returns from NPS are market-linked and subject to market risk. NPS also offers tax benefits under Section 80C and Section 10(12A) of the Income Tax Act.
SCSS (Senior Citizen Savings Scheme) is a savings scheme specifically for Indian citizens aged 60 years and above. It offers a fixed rate of interest and is backed by the Government of India, making it a secure investment option. The deposit has a maturity period of 5 years, which can be extended by another 3 years. The interest on SCSS is paid quarterly and is taxable as per the investor's tax slab. The investment in SCSS is eligible for tax benefits under Section 80C of the Income Tax Act.
PPF (Public Provident Fund) is a long-term savings scheme offered by the Government of India to encourage small savings. It is a fixed income investment instrument with a maturity period of 15 years, which can be extended in blocks of 5 years. The interest rate on PPF is determined by the government and is subject to change. PPF is a tax-free investment, and the interest earned and the maturity amount are exempt from tax. PPF also offers tax benefits under Section 80C of the Income Tax Act. The investment in PPF is considered safe, but it offers lower returns compared to other investment options.
NSC (National Savings Certificate) is a savings bond offered by the Government of India, primarily to promote small savings. It is a fixed income investment instrument with a maturity period of 5 or 10 years. Interest on NSC is compounded on a half-yearly basis and is taxed as per the investor's tax slab. NSC also offers tax benefits under Section 80C of the Income Tax Act. The investment in NSC is safe, but it offers lower returns compared to other investment options.
ULIP (Unit Linked Insurance Plan) is a life insurance product that combines investment and insurance. In ULIP, a part of the premium paid is invested in various financial instruments, such as equities, bonds, and money market instruments, and the rest is used to provide insurance cover. The investment component of ULIP is subject to market risk, and the returns are linked to the performance of the underlying assets. ULIP also has a lock-in period of 5 years. ULIP provides insurance coverage, as well as an opportunity to save and invest for long-term financial goals. The maturity amount is tax-free, but the premiums paid are eligible for tax benefits under Section 80C of the Income Tax Act.
Fixed Deposit (FD) is a savings instrument offered by banks and other financial institutions, in which the depositor invests a lump sum for a fixed tenure at a fixed rate of interest. The interest rate on FD is generally higher than savings accounts and is guaranteed for the entire tenure. FD is considered a safe and secure investment option, as the principal amount and interest earned are guaranteed by the bank. The interest earned on FD is taxable as per the investor's tax slab. FD has a fixed maturity date and the depositor cannot make premature withdrawals without incurring a penalty.
Sukanya Samriddhi Yojana (SSY) is a savings scheme launched by the Government of India for the girl child. The scheme is designed to meet the educational and marriage expenses of the girl child. It is a long-term savings scheme with a maturity period of 21 years or until the girl child turns 18 years, whichever is earlier. The deposit in SSY earns a fixed rate of interest, determined by the government, and is compounded annually. The interest earned on SSY is taxable as per the investor's tax slab. SSY also offers tax benefits under Section 80C of the Income Tax Act. The investment in SSY is considered safe and secure, as it is backed by the Government of India.
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