Women are taking on bulls and bears, with inflation moving up again. Though income tax basic exemption limit has been raised to Rs 1,45,000 for eves, in practice there will be a saving of Rs 1,000 only, in tax.
Women are, hence, looking for not just plain vanilla stuff, but attractive investment products. A flurry of tailor-made offers, tossed up in the market merits scrutiny.
ING Vysya's Mahilanivesh
A woman can put her money in ING Vysya's Floating Rate Fund, which gets transferred to ING Dividend Yield Fund in 12 installments.
The former is an open ended (no lock-in period; investors are free to buy or sell their units anytime) liquid scheme, while the latter is an open-ended equity one. This is better than a Systematic Investment Plan (SIP) because it ensures regular dividend and spurts, when stock shoots up.
Consistency and high returns are both assured, while risk is low. The Floating Fund too yields higher returns than a bank's savings account. The initial investment is Rs 12,000 and you will have to fill only one form to complete all the formalities.
Max New York Life's scheme for women
An investment scheme has been launched for women, where income doubles after six years. The offer is, however, open only till March 31.
UTI Bank's SIP
The UTI Bank's Systematic Investment Plan (SIP) for women minimises risks greatly. The bank arranges monetary affairs in a way that many units are bought when prices are low and few units are purchased, when prices are very high.
LIC's Jeevan Sneha
This is a with-profits plan for women, where after 5 years bonuses are awarded. Premiums paid regularly for 2 years ensure cover. Even if premiums are not paid for the next three years, the policy does not lapse.
Card power
HDFC Bank's Silver credit card for women affords more benefits than the high-sounding Gold card because a household insurance of Rs 1 lakh comes free along with it. A Citibank Silver card brings in household insurance, up to Rs 50,000, eliminating worries about insuring household goods like furniture, refrigerators, TVs etc.
ICICI Bank's recurring deposit scheme
There is no Tax Deduction at Source (TDS) on a recurring deposit opened by a woman. Moreover, you can start by depositing a mere Rs 500 every month instead of Rs 1,000 applicable to other schemes.
Gold mutual funds
The yellow shining metal, if kept in bank burdens you with a hefty monthly rent and service tax. If sold, even hallmarked variety is accepted for a lesser price. An approved institution like MMTC does not buy gold bars and coins. How could you bring the shine back? Invest in gold mutual funds to get the glow back.
A savvy woman investor can park earnings in recently launched gold mutual funds, like UTI Mutual Fund's UTI Gold and Benchmark Mutual Fund's Gold BeEs where gold units are traded on stock exchange like shares on a daily basis.
Dwell on this a house
In a place like Delhi, where the stamp duty payable for house construction is lesser for women (6 per cent) against men (8 per cent), investment by women in a house really pays off. As everyone knows, this levy is most burdensome while purchasing a house.
Fixed deposit schemes for women and men
Irrespective of you being a man or woman study the investment schemes available to make the buck go a long way. Here are products, in which quick action may fetch quick returns for both men and women.
SBI's Platinum Account fixed deposit scheme will give you an interest of 9 per cent and the money has to be put in bank for three years. The minimum deposit is Rs1 lakh, but as interest rate is lucrative, the returns are on the higher side. Again, the scheme is open only till March 31.
Punjab National Bank's Mahabachat Term Deposit Scheme is also a fixed deposit investment for 3 years and yields a 9 per cent interest, which is again attractive. The scheme is open till April end.
IDBI's fixed deposit is an 800-day scheme, which yields 9 per cent interest. The minimum deposit is Rs 10,000 only. ICICI Bank has put out a 890-day fixed deposit, which gives 9 per cent interest. Here too, the minimum deposit asked for is Rs 10,000 only.
ICICI Bank's scheme offers 9.5 per cent interest, but remember it's a five-year investment. Kotak Mahindra Bank's tax saver deposit gives 9 per cent interest and also runs for five years. Apart from good returns they can also be used as tools for tax planning.
Fixed deposits are on top
In present scenario, women should remember that a bank fixed deposit is surging ahead of other market instruments.
The National Savings Certificate and Public Provident Fund offer 8 per cent interest, while a fixed deposit may give 9 per cent plus interest if compounded quarterly in banks, and half-yearly in National Savings Certificate and annually in Public Provident Fund. The maturity time is also shorter for a bank's FD scheme.
Bancassurance is better
One can also go for a bancassurance product, where all services are offered as a package.
Here deposit savings, recurring or fixed is tied up to insurance, making for an almost free cover, instead of spending a lot on a separate insurance policy.
A group cover for total family can be advantageous, for only half the money put on policies is needed.
The traditionals be cautious
RBI Bonds have lost their sheen after the new budget because tax on interest income will be deducted at source.
A bond yields 8 per cent interest, but TDS, which was put on hold in 2004, has been brought in again in this budget. If interest income exceeds Rs 10, 000 tax would now be deducted at source.
The post office monthly income scheme, too, has already lost shine, with removal of 10 per cent bonus from last February.
While mutual funds are great to invest in, the move to raise dividend distribution tax, DDT, may trim down the returns for investors. A mutual fund scheme that distributed Rs 56.75 to investors on a profit of Rs 100 before would now give only Rs 54.79 only because of DDT.
Know your investments inside out
You should find the nitty-gritty of any investment product, before putting money. Here are pointers to choose picks:
If an eve invests in a scheme like ING' Mahilanivesh, she should read daily NAVs in newspapers and ask for quarterly annual statements, which are published on a mandatory basis.
A gold mutual fund should always be examined from point of entry load and exit load. If they are 4 per cent and 3 per cent respectively, then think twice before investmenting in such a fund.
Kotak's Gold Fund and ICICI Pru's golden mutual fund have to be watched, as they may also enter the market. An entry load of 1 per cent and exit load of 0.5 per cent are ideal in a gold fund. So, do find out who offers what.
Some organisations like Citibank have free financial advisory services for women, which can be availed of. Private outfits like Geojit have special women investor divisions, which guide a woman through puzzling investment phases.
Penalties must be understood, as for example, withdrawal from a post office scheme within 1 year leads to imposition of 2 per cent tax, at once.
The mutual funds dividends may undergo a change after April 1, when the companies would start announcing their dividend payouts and hence, it's prudent to wait and see whether your profit would go up or remain the same and then, invest.
Meenakshi Subramaniam is a former IRS officer
