Save tax on fixed deposit interest

All interest that one makes on savings accounts or fixed deposit is taxable in your hands . It is considered as part of other income in the tax returns.
Any interest over 10,000 Rs is also tax deductible at source.

Now lot of us keeps money in savings accounts and also invest in fixed deposits.

On savings account one earns around 3.5 % and post tax is 2.31% or if invested in fixed deposit @6.5% post tax is 4.29%

Now my advice has been to invest in liquid funds vs keeping money in the bank account . The liquid funds will give around 6% pre tax returns but is still taxable in your tax rate .

This tax needs to be paid because these are all debt products and hence tax is applicable even post three years.

There is one product which is an equity product which enables this to be tax free in one years time.

This is called as arbitrage funds . These have been giving around 5-5.5% returns which when invested for more than one year will be tax free... Which means more than the 4.3% returns from fixed deposit.

This is an interesting product and can be used to get the 1% additional benefit as compared to fixed deposit or more than investing in the liquid funds for emergency fund.

This is a good way to get better returns. Investing in it is good opportunity.

Use it if you can wait for more than one year .. that's simplefinancialsense

Save me today so i can save you tomorrow

An interesting quote that I got from my financial advisor... And that struck me as an interesting way to look at things

In the heat of the moment , we always look to spend money on small things.. A pizza , a watch , a new mobile or even a nice coca cola even though you really did not need to spend on it .

I analyzed my own data for the last month .. What I ate in the office , how much I spent on coffee ( its like ten steps from my room) and what I spent with my family over the weekend .

The amount when it comes out looks a little uncomfortable.. 6780 Rs in the last 30 days.. The last month. ( and I was travelling for most of last month!)

This doesn't really include the really important stuff which couldn't be avoided ... School stuff, clothes for growing children ... Just stuff that could easily have been avoided .

Now, I don't mean to say that don't go out and enjoy- with my tough weekdays of 15-16 hr days.. This is the only time I get to spend with my family and they do deserve this.. But we need to find some different things to do vs just going to the malls and having coffee and a dinner in crowded places . More on this topic in another post

But lets get back to the point .

If I am able to save 3000 Rs a month additonal.. That's 36000  Rs a year. In 20 years @15% this would be significant benefit adding to your retirement kitty..

Save today.. So it can save you tomorrow.

It's simplefinancialsense

Negotiation-- an update

Here's a quick update. I went to the chemist shop just outside my apartment and was buying a few medicines. He started charging me the MRP--

and

I asked him for a discount... :)

and he was a bit surprised-- but finally he agreed and told me that he only gives discount beyond 100 Rs--- a 4%.

Nice ;)

With all the medicines i buy from him... this will give me at least 600/- annually.