4. Recurring Deposits
Monthly savings required: Rs.25,836
Returns: 9.25 Percent
Advantage: A recurring deposits A/C will allow you to lock your money into a high interest rate. Returns are guaranteed and investment is very safe if you select a reputed bank.
Disadvantage: The income is fully taxable, and a higher tax bracket can peel off the gains on investment. It cannot lock in your money for 15 years, as the maximum tenure offered by banks is 10 years.
Keep in Mind: Taxed will be charged on the income earned every year, even though you receive the sum on maturity.
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5. ULIPS
Monthly savings required: Rs.24,127
Returns: 10 Percent
Advantage: You are eligible for tax deduction at the time of investment. Here you a dual benefit of tax-free growth and tax free maturity benefit. Life risk cover is an added advantage ULIPS (Unit-linked insurance plans) offers.
Disadvantage: High charges compared to mutual funds. Returns are market-linked and could be lower than estimated.
Keep in Mind: The premium paid is used by the insurance companies to purchase units in investment assets chosen by you. You give receive a significant tax benefit if your policy gives you a sum assured of 10 times the annual premium.
Also Read: 5 Secrets of Warren Buffett's Success
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