Fixed income
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year, and to repay the principal amount on maturity. Fixed-income securities can be contrasted with equity securities -- often referred to as stocks and shares -- that create no obligation to pay dividends or any other form of income.
In order for a company to grow its business, it often must raise money -- for example, to finance an acquisition; to buy equipment or land; or to invest in new product development. The terms on which investors will finance the company will depend on the risk profile of the company. The company can give up equity by issuing stock, or can promise to pay regular interest and repay the principal on the loan (bonds or bank loans). Fixed-income securities also trade differently than equities. Whereas equities, such as common stock, trade on exchanges or other established trading venues, many fixed-income securities trade over-the-counter on a principal basis.
The term "fixed" in "fixed income" refers to both the schedule of obligatory payments and the amount. "Fixed income securities" can be distinguished from inflation-indexed bonds, variable-interest rate notes, and the like. If an issuer misses a payment on a fixed income security, the issuer is in default, and depending on the relevant law and the structure of the security, the payees may be able to force the issuer into bankruptcy. In contrast, if a company misses a quarterly dividend to stock (non-fixed-income) shareholders, there is no violation of any payment covenant, and no default.
The term fixed income is also applied to a person's income that does not vary materially over time. This can include income derived from fixed-income investments such as bonds and preferred stocks or pensions that guarantee a fixed income. When pensioners or retirees are dependent on their pension as their dominant source of income, the term "fixed income" can also carry the implication that they have relatively limited discretionary income or have little financial freedom to make large or discretionary expenditures.
https://en.wikipedia.org/wiki/Fixed_income
The best way to maximise your real, post-tax fixed income gains
Fixed Income Investment Options
- EPF (Increase upto 12% of Basic)
- PPF
- NPS
- Recurring deposits (isave ICICI, bigger deposit allowed)
- Fixed deposits
- arbitrage mutual funds
- money market debt funds
- gilt debt funds
- short to medium-term bond funds
- Bonds
- Debentures (good option)
- https://www.thefixedincome.com
PPF (Public Provident Fund)
After 15 years
- Close account immediately after 15 years and withdraw the money (tax-free), can open a new account after that
- Extend in a block of 5 years without any contributions (keep getting interest, default)
- Withdraw any amount
- One withdrawal per financial year
- Extend in a block of 5 years with contributions (submit "Form H" within 1 year)
- Withdraw max of 60%
- One withdrawal per financial year any amount under 60% limit combined
Is Investing Rs. 1.5 Lakhs in PPF Before April 5th a Wise Choice?
EPF Employee Provident Fund
How to Get or Withdraw EPF Money After Resignation
Pension fund is a retirement savings plan where a portion of your salary is set aside for your future. The funds are managed by a trustee and typically paid out as a monthly pension after retirement. Provident fund is similar, but the entire balance is paid out as a lump sum, not as a monthly pension.
Income Tax on Pension: Is Pension Taxable? - Tax2win
Emergency Fund / War Chest / Contingency Kitty
- 30% should be parked in a savings bank account (other than primary account) for easy liquidity (50K)
- 40-50% should be parked in two or three good liquid funds with insta-redemption facility (100K)
- 20-30% should be parked in high credit quality money market, corporate bond or banking and PSU debt funds (50K)
For your ease of selection, Paytm Money has created filtered lists comprising of the above mentioned debt fund categories. These are under "Better than Savings Account", "Better than Fixed Deposit" and "High Quality Debt Funds" investment ideas
Long-term emergency funds
This is where you save for large-scale emergencies like a major natural disaster or a sudden medical emergency. This fund should be invested in instruments that allow you to earn a slightly higher rate of interest but may take a couple of days to liquidate.
Short-term emergency funds
This is the fund you rush to in cases of emergencies. Such a fund should offer little in terms of interest but allow immediate accessibility, which in case of extreme situations can suffice till you gain access to your long-term emergency funds.
https://www.paytmmoney.com/blog/emergency-funds
Retirement
LIC PMVVY - Papa - 15 lakh (10 years) (expired)
- Last date - March 31, 2023
- 10K per month
- https://groww.in/p/savings-schemes/pradhan-mantri-vaya-vandana-yojana
SCSS - senior citizens saving scheme - 30 lakh (8 years) - 8%
- only one time deposit
- no partial withdrawal
- This is allowed only after 1 complete year. After 1 year and before 2 years, 1.5% interest is deducted and the rest is paid out. After 2 years and before Maturity, 1% interest is deducted. After 3 years, premature closure is allowed without any deduction of interest. Use Form E as application for premature account closure.
- After 5 years. You can extend it further by 3 years but submitting Form B.
- An extension is allowed only once. (total time period - 8 years)
A 6% return from arbitrage fund is enough (5.37% post-tax) to beat the 7.75% bonds even without factoring in the one-lakh tax-free gains.
SCSS Interest Rate FY 2024-25: What can Senior Citizens get now? - The 1% News
Mis (Monthly Income Scheme) - Limit 9 lakh