The maximum limit for investing in PPF is Rs 70,000/- since there is no change in that limit in the budget 2005. It will be better if such articles are first scrutinised by some Authority before being placed for general public. The rest, many of my friends have already written on this.
To be frank with you, I started reading the article with lot of enthusiasm. After completing the reading, I have started doubting whether the person who penned this article is insane, or the ones who have published it. Amazing this should have been included in jokes column.
This is foolery...to put such a ridiclous headline like 'get 60% risk free returns'. This is just a way to get more hits. I think rediff should refrain from using such means to garner hits.
God..sound and fury, amounting to nothing...why state the obvious and mask it as "61% risk free return"..firstly...if u earn above 350,000..ur tax rate is not 33%..it's 30% upto 10 lacs..if i remember correctly..so ur return is 108/(0.7*100)=54%....
so cut the crap....previously..as per the earlier tax regime...u were investing 0.15*1 lac=Rs. 85 k and getting 108k..so a return of 30%...
I do not agree with the 61% return on investment. Let us look at it correctly.When we invest in tax saving instrutments, we have to shell out Rs. 100,000 and not 67,000. Here we are having an implied saving of 33,000. This saving does not come back to us immediately on investment. Instead we should look at it as a return of 33,000 on 100,000. Add 8000 Rs to it as interest on 100,000. hence total gain is 41000 or 41% in the first year. This by no means is less. I agree with the author that it is a good option but 61% is not correct
thank you for this coloumn, i could effectivly use this article and have a sale done of an insurance policy hope you come up with these kind of articles. Thanks once again. Rohan
I think the effective rate of return (or internal rate of return as per text books) can be calculated in excel like this: (I have taken an optimistic 7% return for 5 yrs and your logic of net investment of 67,000 rupees) period Regular bond Deep discount bond 0 -67000 -67000 1 7000 0 2 7000 0 3 7000 0 4 7000 0 5 107000 140255.1731
Rate of return 17% 16%
So the net return would be in the range of 15-20% and not astronomical 61%.
