Best Investments | Best Investment Plans

Before going to discuss about Investment we have to understand the present situation of the economy i.e. a downtrend economy. An economic downturn is a phase of the business cycle in which the economy as a whole is in decline. This phase basically marks the end of the period of growth in the business cycle. Economic downturns are characterized by decreased levels of consumer purchases (especially of durable goods) and, subsequently, reduced levels of production by businesses.

While economic downturns are admittedly difficult, and are formidable obstacles to small businesses that are trying to survive and grow, an economic downturn can open up opportunities. A well-managed company can realize the opportunity to gain market share by taking customers away from their competitors.

So the investors should be alert enough before investing money in to market. I think lower risk investment should be selected. This may be in the:

1. Mutual fund because existing NAV of most of the funds are below the initial issue value and this will give a good return.

2. Public Provident

3. ULIP

4.5 years Cumulative time deposits with post office.

5. Medical insurance.

The above is for the person who wants to get tax benefit also.

Otherwise stock trading as short traders is also profitable under the present situation.

Investment is the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. It is related to saving or deferring consumption. Investment is involved in many areas of the economy, such as business management and finance no matter for households, firms, or governments. An investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated in foreign currency, that has certain level of risk and provides the possibility of generating returns over a period of time.

Various plans are available for investment like systematic investment plan and long term investment plan.

A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help you save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as Rs 100 and the frequency of investment is usually monthly or quarterly. An SIP allows you to take part in the stock market without trying to second-guess its movements. An SIP means you commit yourself to investing a fixed amount every month. Let's say it is Rs 1,000. When the NAV is high, you will get fewer units. When it drops, you will get more units.

Long term incentive plan or LTIP is a type of executive compensation that typically comes in the form of performance shares or matching shares of the company. These plans were used heavily since Regulation 162(m) passed, which made performance based compensation deductible; however, upcoming changes in the Securities and Exchange Commission's executive compensation policies may change this practice.

Tax reliefs from Section 80C continue to be available to Indian citizens as per the latest budget. You can invest a maximum of Rs. 1 Lakh in any of the instruments as per Section 80C and get the entire amount of Rs. 1 Lakh deducted from your taxable income.

We have listed down the possible avenues available as part of Section 80C which citizens can make use of:

1. Provident Fund (PF): This includes both Employees Provident Fund (EPF) as well as Public Provident Fund (PPF), though you can invest up to a maximum of Rs 70,000 in PPF. The current rate of return on EPF is 8.5 per cent while that on PPF is 8 per cent.

2. Insurance: This includes a life insurance policy or a unit-linked insurance plan (ULIP). The lock-in period for ULIPs is between 3 to 5 years and the returns vary depending on the performance of your fund. There is a catch - if your annual premium exceeds 20 per cent of the sum assured on your policy, you will not get the tax benefit.

3. National Savings Certificate (NSC): This was a popular instrument earlier though have lost favor from investors at present. The current rate of return is 8% and there is a lock in of 6 years.

4. Bank Fixed Deposit: Last year, this was one of the best options for citizens as the interest rate was higher than PPF or other options. They come in with a lock-in of 5 years. This year the rates are not good but may improve by year end.

5. Retirement Benefit Plan: These are offered by mutual funds. Few examples are UTI Retirement Benefit Plan and Templeton India Pension Plan.

6. Equity Linked Savings Scheme (ELSS): These are offered by mutual funds.

7. Superannuation Fund: Usually your employer, on behalf of you, does this by deducting the investment amount from your salary.

8. Pension Policies: Earlier, there was a limit of Rs 10,000 on such investments; however that ceiling has now been removed.

9. Prepayment of Principal of home loan: Take the advantage of paying interest up to Rs 1.5 Lakhs as per another section. This section only includes taking advantage of paying the principal back up to Rs 1 Lakh.

10. Tuition Fees: Deduction under this section is available for tuition fees paid on two children's education. If Assesse have more than two children then he can claim tuition fees paid of only two children's. The Deduction is available for any two children. Husband and wife both have a separate limit of two children each, so they can claim deduction for 2 children each. Assesse cannot claim tax benefit for his own tuition fees.