Start Investing Young

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“S T A R T -
I N V E S T I N G -
Y O U N G”.

Benefits Of Investing at Young Age
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1) Better Position than Other –
This is the most straight forward of all the benefits, but yet it may be the most
important of them all. Quite frankly if you begin investing at a young age history tells
us that you will end up with far more than those who invest later in life. Having time
on your side means having a longer time period of being able to save money to invest
and a longer time period of being able to find investments that can increase in value
quite nicely.
2) Compounding returns –
Compounding returns are extremely powerful over the long run, and the earlier you
get started the greater your chance is to take advantage of this. Put more simply this
is the power of the time value of money. Regular investments in an investment
portfolio or a retirement account can lead to huge compounding benefits.
3) Improves spending habits –
This benefit is generally overlooked by many, but investing early on definitely helps
develop positive spending habits. Those who invest early on are much less likely to
have issues with overstepping their boundaries in spending over the long run.
Investing teaches important lessons and the earlier you are able to learn those
lessons the more you can benefit.
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4) Helps to Tackle that Tight Situations –
If you are a young investor you are putting yourself ahead in the world of personal
finance as a whole. By growing your investments over time you will be able to afford
things that others can’t. Your personal finances are bound to get tight at times
throughout your life, and investing at a young age can help in those tight times.
It is important to note that saving money to invest at a young age isn’t easy, but you
simply can’t afford to wait to invest when it is convenient. Don’t shy away from
investing because you don’t have enough, simply start with making small
investments and give them time to mature. Investing while you are young is one of
the best decisions one can ever make.
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Mistake#1 Mistake#2 Mistake#3
Mistake#4
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1) Not Investing: -
To many, investing seems like a challenging process. It requires focus and discipline.
In order to avoid it, many young investors convince themselves that they can invest
"later" and everything will be OK. What many people don't realize is that the earlier
you start putting money away, the less you'll have to contribute. By investing
consistently when you are young, you will allow the process of compounding to work
to your advantage. The amount that you invest will grow substantially over time as
you earn interest, receive dividends and share values appreciate. The longer your
money is at work, the wealthier you will be in the future and at the lowest possible
cost to you.
2) Being Unrealistic: -
When you are investing at a young age, you can afford to take some calculated risks.
That said, it is important to have realistic expectations of your investments. Don't
expect every investment to immediately start delivering a 50% return. When the
markets and economy are doing well, there are stocks that do have returns like this,
but these stocks are generally very volatile and can have huge price swings at any
time. By expecting paper losses in bad years and an average return of 8 to 12% per
year over the long run, you can avoid the trap of abandoning your investments out of
frustration.
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3) Not Diversifying: -
Diversification is a strategy that will reduce your overall risk by having investments in a
variety of different areas. This allows you not be too exposed to an investment that
might not be doing so well and helps keep your money growing at a consistent, steady
rate every year. Investing in index funds is a great way to diversify with minimal effort.
4) Letting Your Emotions Drive Your Investments: -
Another mistake that many investors make is becoming emotional about their
investments. In some cases, this means believing that an investment that has done
well in the past, like a high-performing stock, will continue to do well in the future.
Buying an investment that has a high price because of its past success can make it
difficult to profit from that investment. Conversely, many people will sell their
investments, or stop making their investment contributions when the markets are down
or the economy isn't doing well. This behaviour will lock in your losses, hurt
your compounding and take you nowhere.
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8
Investment Product
Small Saving
Instrument.
Gold Monetisation
Scheme
Kisan Vikas
Patra
Sukanya Samriddhi
Account
PPF
Senior Citizens
Saving Schemes
N.S.C
Post Office Scheme
& Deposits
Sovereign
Gold Bonds
Fixed Income
Instrument.
Govt.
Securities.
Corporate
Bonds
Company
Deposits

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(I) Public Provident Fund(PPF): -
Instituted in 1968 the objective of PPF is to provide a long term retirement planning
option to those individuals who may not be covered by the provident funds of theirs
employers or may be self employed. PPF is 15 years deposit account that an be
opened with a designated bank or a post office. Some key takeaways: -
 A person can hold only one PPF account in their name except an account in the
name of a minor child to whom he or she is a guardian.
 HUF & NRIs are not allowed to open PPF accounts.
 If a resident subsequently becomes an NRI during the prescribed term, he/she may
continue to subscribe to the fund till its maturity on a repatriation basis.
 Joint account cannot be opened, however nomination facility is available.
 Minimum amount that needs to be deposited in this account is Rs 500 & the
maximum limit is Rs 1,50000.
 Subscription should be in multiples of Rs 5 and can be paid in one lump sum or in
instalment not exceeding 12 in a financial year.
 Penalties apply if the minimum deposit is not made in a financial year.
 The account matures after expiry of 15 years fro the end of the financial year in
which the account was opened.

Withdrawal From PPF
 One withdrawal in a financial year is permissible from seventh financial year.
 Maximum can be 50% of balance at the end of the fourth year or the immediate
preceding year, whichever is lower.
 On completion of the term, the account can be closed or continued with or
without additional subscription, for further blocks of 5 years.
 Once an account is continued without contribution for more than a year, the
option cannot be changed.
 Account holder can avail the loan facility in the 4th to 6th year out of the amount
standing to the credit in the account between the third financial year to the fifth
financial year.
 In the event of death of the account holder during the term of the scheme, the
balance in the account shall be paid to the nominee or to the legal heir if the
account doesn’t have a nomination.
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Benefits Of Public Provident Fund(PPF)
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 Contribution to PPF is eligible for deduction under section 80C of Income tax act
1961.
 Interest is completely tax free and the applicable rate of interest for 2015-16 is 8.7%.
 Unlike other instruments which are eligible for tax deductions under 80 C, PPF
enjoys an exempt-exempt-exempt (EEE) status, where withdrawal is on maturity is
also not taxed.
 An PPF account is not subject to attachment(seizure of the account by court order)
under any order or decree of a court.
Public Provident Fund – Eligibility
 A Public Provident Fund (PPF) Account can be opened by resident Indian
Individuals and individuals on behalf of minors.
 Only one Public Provident Fund Account can be maintained by an Individual,
except an account that is opened on behalf of a minor.
 A Public Provident Fund Account can be opened either by the Mother or Father on
behalf of their minor Son or Daughter; however the Mother and Father both cannot
open Public Provident Fund accounts on behalf of the same minor.
 Grand-parents cannot open a Public Provident Fund (PPF) account on behalf of
minor grand-child; however, in case of death of both the Father and Mother, Grand-
parents can open a Public Provident Fund (PPF) account as guardians of the
Grand-child.
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The Union Finance Minister has proposed to launch 3 Social Security Schemes in
Budget 2015-16. The three Schemes are;
1. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
2. Pradhan Mantri Suraksha Bima Yojana (PMSBY) and
3. Atal Pension Yojana
The Union Finance Minister, Shri Arun Jaitley presenting the Union Budget 2015-16,
said that a large proportion of India’s population is without insurance of any kind –
health, accidental or life worryingly, as our young population ages, it is also going to
be pension-less..
About PMJJBU: -
 It is a Life Insurance coverage plan.
 This plan covers both natural and accidental death risk. The maximum sum
assured offered under this Govt. Scheme is Rs 2 Lakhs.
 The premium will be Rs. 330 per year, or less than one rupee per day, for the age
group 18-50. The scheme will be offered by Life Insurance Corporation (LIC of
India). Government is also encouraging the other life insurance companies to offer
this scheme.
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Features of Govt’s Pradhan Mantri Jeevan Jyoti Bima Yojana
Qs 1: - Who is eligible to take PMJJBY?
Ans: - This life insurance plan is available to people (all citizens) in the age group of
18 to 50 years and having a bank account. People who join the scheme before
completing 50 years can, however, continue to have the risk of life cover up to the age
of 55 years subject to payment of premium.
Qs 2: - When will this Scheme start / open?
Ans: - Pradhan Mantri Jeevan Jyoti Bima Yojana Scheme is now open for
subscription for the insurance period (1st June 2015 to 31st May 2016). The last date
to apply to this scheme for this insurance period is 31st May 2015 (Govt has extended
this deadline till 31st August 2015).
Qs 3: - What is the Premium amount?
Ans: - You have to pay Rs.330 per year. It will be auto-debited in one instalment.
Qs 4: - What is the Premium Payment Mode?
Ans: -The payment of premium will be directly auto-debited by the bank from the
subscribers (policyholder’s) account.
Qs 5: - What is the total Risk Coverage offered?
Ans: - Rs 2 Lakh will be paid, in case of death for any reason (natural or accidental
death).
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Qs 6: -Terms of Risk Coverage?
Ans: - A person has to opt for the scheme every year (1st June to 31st May). He can
also prefer to give a long-term option of continuing, in which case his account will be
auto-debited every year by the bank.
Qs 7: - Is Nomination facility available?
Ans: - Yes, nomination facility available. In-case of unfortunate event of death of the
policyholder, the nominee will get the death benefit.
Qs 8: - What are required documents?
Ans: - As per government, a copy of your Aadhar card alone is enough to subscribe to
this scheme.
Qs 9: - Who will implement this Scheme?
Ans: - Jeevan Jyoti Bima scheme will be offered by Life Insurance Corporation and all
other life insurers who are willing to join the scheme and tie-up with banks for this
purpose.
Qs 10: - Will Government contribute to this scheme?
Ans: - Various other Ministries can co-contribute premium for various categories of
their beneficiaries out of their budget or out of Public Welfare Fund created in this
budget out of unclaimed money. This will be decided separately during the year. An
individual is eligible to join this scheme through one savings bank account only.
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Pradhan Mantri Suraksha Bima Yojana
Highlights of the Pradhan Mantri Suraksha Bima Yojana (PMSBY – Scheme 1 – for
Accidental Death Insurance) are:
Eligibility:
ICICI Bank Savings Bank (SB) Account holders between 18 years (completed) and
70 years (age nearer birthday) who give their consent to join / enable auto-debit, as
per the modality, will be enrolled into the scheme.
Policy period:
The cover shall be for one year period starting from June 1, 2015 to May 31, 2016 for
which option to join / pay by auto-debit from the designated Savings Bank account on
the prescribed forms will be required to be given by May 31, 2015 - extendable up to
May 31, 2016. For the saving A/c holder joining after May 31, 2015 the cover shall end
on May 31, 2016.
Premium: Rs. 12 per annum.
Payment Mode:
The premium will be directly auto-debited by the bank from the subscribers account.
This is the only mode available.
Risk Coverage:
Total coverage (sum-insured) under the scheme is Rs. 2 Lakh.
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Exclusions:
Major Exclusions:
1. Intentional self injury,
2. Suicide or attempted suicide whilst under the influence of intoxication liqour or drugs, Any loss arising
from an act made in breach of law with or without criminal intent.” For more details, please refer
the Master Policy wordings.
Terms and conditions:
1. Customer should not be insured under Pradhan Mantri Suraksha Bima Yojana under any other Savings
Bank Account. In case the same is found to exist, premium shall stand forfeited and no claims would be
paid.
2. The cover shall commence from the 1st of the month, subsequent to the date of enrolment in the
scheme.
3. Customer will have to pay full annual premium even if he/she joins the Scheme after the commencement
of the Group Policy.
4. The membership in the scheme will remain in force as long as all premium due are paid until attaining
age of 70 years as on Annual Renewal Date.
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S.no Table of Benefits Sum Insured
1. Death Rs 2 Lakhs
2. Total and irrecoverable loss of both eyes or loss of use
of both hands or feet or loss of sight of one eye and
loss of use of one hand or one foot.
Rs 2 Lakhs
3. Total and irrecoverable loss of sight of one eye or loss
of use of one hand or one foot
Rs 1 Lakhs

5. Policy shall not be issued if nominee details are not provided in SMS / available in
SB account. No separate intimation shall be provided for the same. To have a different
nomination, please enrol for the scheme at the branch.
Note: - Any information provided by the customer if found to be untrue, the
membership to the scheme shall be treated as cancelled from the date of joining the
scheme and all premium paid in respect thereof shall stand forfeited.
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 The Atal Pension Yojana will be effective from 1 June 2015.
 The scheme intends to bring pension benefits to allow people of the unorganised
sector to enjoy social security with minimum contribution per month.
 People who work in the private sector or employed in occupations that do not give
them the benefit of pension can apply for the scheme. They can opt for a fixed
pension of INR 1,000 or 2,000 or 3,000 or 4,000 or 5,000 on attaining the age of
60.
 The amount of contribution and the individual’s age will determine the pension.
Upon the contributor’s death, the spouse of the contributor can claim the pension
and after the spouse’s death the nominee will be returned the corpus accrued.
 The amount collected under the scheme is to be managed by Pension Funds as
per the investment pattern specified by the Government. Individual applicants will
have no choice of pension funds or investment allocation.
Benefits of Atal Pension Yojana
 The government of India has decided to contribute 50 percent of the user’s
contribution or INR 1,000 a year (whichever is lower) for a period of five years. This
contribution will, however, be enjoyed only by those who are not income tax payers
and those who join the scheme before 31 December 2015.
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Eligibility
 The Atal Pension Yojana (APY) is open to all Indians between the age of 18 and
40. This allows an individual to contribute for at least 20 years before reaping the
benefits of the scheme.
 Any bank account holder who is not a member of any statutory social security
scheme can avail of the scheme.
All existing members of the government’s ‘Swavalamban Yojana NPS Lite’ will
automatically be migrated to the Atal Pension Yojana. It will now replace the
Swavalamban scheme, which did not gain much popularity across the country.
For those who does not have a bank account
A person needs to open a bank account first by submitting the KYC document and
Aadhaar card. He/she is also required to submit the APY proposal form.
Exiting the scheme
Under ordinary circumstances, an account holder who has enrolled for the Atal
Pension Yojana will not be able to exit the scheme before the age of 60. Exiting the
scheme is only possible in special circumstance such as in the event of the death of
the beneficiary.
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III Post Office Monthly Income Schemes and Deposits
(a). Post Office Monthly Income Scheme
 Post office monthly income scheme provides a regular monthly income to the
depositors. This scheme has a term of 5 years.
 Minimum amount of investment in the scheme is Rs 1500, and the maximum
amount is Rs 4.5 lakhs for singly handled account and Rs 9 lakhs of the account is
held jointly.
 A depositors can have multiple accounts but the aggregate amount held in the
scheme across all post offices cannot exceed the maximum permissible limits. The
deposits can be made in cash, cheque or demand drafts. For 2015-16 the
applicable interest rate is 8.4% p.a payable monthly. Nomination facility is
available at the time of opening or subsequently at any time before maturity.
Premature Withdrawal: -
 It is allowed after One Year of opening of account. If the account is closed
between 1 and 3 years of opening, 2% of the deposited amount is deducted as
penalty. If it is closed after 3 years of opening, 1% of the deposited amount is
charge as penalty.
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(b). Post Office Time Deposits
 Post Office time deposits are similar to fixed deposits of commercial banks. The
post office deposits with terms of one year, two years, three years and five years.
The account can be held singly in individual capacity or jointly by a maximum of two
holders.
 The minimum deposit amount is Rs 200. There is no maximum limit. The interest
rate on these accounts are reset annually. The applicable interest rate ranges from
8.4% to 8.5% between one to five years term.
 Interest rate are compounded quarterly and are subject to tax.
 The five year term deposits is eligible for tax benefits under Section 80 C of the
Income Tax Act 1961.
(c). Post Office Recurring Deposits(RD)
 The account can be opened by a resident individuals and a maximum of two people
can hold a account jointly or on either or survivor basis.
 An individual can hold any number of RDs account, singly or jointly.
 Minimum deposit can be made of Rs 10 per month and in multiple of Rs 5
thereafter for every calendar month. There is no maximum limits.
 Interest is payable on quarterly compounded basis.
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 Maturity amount with interest is paid at the end of the term. Interest is taxable.
Deposit have to made regularly on a monthly basis and penalty applies for non
payment of instalment.
 An account can be discontinued by post office, if the payments are not made for
four months.
 The account can be closed after 3 years, and in case of such pre-mature closures
only the saving banks interest is payable.
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IV Kisan Vikas Patra(KVP): -
What does It mean?
The “Kisan” in Kisan Vikas Patra does not mean that only farmers can buy these
saving certificates but means that the revenue mobilized by this scheme will be used
by the Government of India in welfare schemes for farmers. Any individual can safely
invest and save their money in the form of Kisan Vikas Patra.
 The KVP can be purchased by an adult for self or by two adults for a minor
investor.
 It can be purchased from any departmental post office or bank through cash, local
cheques or DD.
 KVP is available in denomination of Rs 1000, Rs 5000, Rs 10000 and Rs 50000.
 The Minimum investment is Rs 1000 and there is no maximum investment.
 The amount invested doubles in 8 years and 4 months. The effective rate of
interest is 8.7%.
 The facility for nomination and joint holding is available in KVP and the certificate
can be transferred from one person to another by delivery.
 It can be pre- Maturely encashed 2 1/2 years from the date of issue.
 No tax incentive for the investment made and interest earned is taxed on accrual
basis.
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V Sukanya Samriddhi Account Scheme
It is a scheme launched for the benefit of girl children. The account can be opened in
the name of a girl child by a natural or ;legal guardian. The account is opened with an
authorized list of banks including SBI, Axis bank, ICICI bank, Canara Bank and others.
A bird eye view of the benefits attached with the scheme: -
 Only one account can be opened in the name of a child and a guardian can open a
maximum of two accounts in the name of two different girl children.
 The age of the child cannot be more than 10 years at the time of opening of the
account. The minimum investment in the account is Rs 1000 in a financial year and
a maximum of Rs 1,50000.
 Investment can be made in lump-sum or in trenches. The account will earn interest
at the rate of 9.2% compounded annually for the year 2015-16.The account can be
transferred to any place in India.
 The account will mature on the completion of 21 years from the date of opening of
account.
 If the girl child gets married before the age of 21 years of age then the account is
closed.
 Partial withdrawal is allowed after the holder attains 18 year of age, to the extent of
50% of the amount in balance at the end of preceding financial year.
 Eligible for deductions under section 80C.
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VI Sovereign Gold Bond Scheme
Glimpse of SGBs is presented below: -
 This scheme was launched in 2015 to provide an alternative way for investors to
take exposure to gold as an investment.
 SGBs are government securities denominated in grams of gold. The bonds are
issued in denomination of one grams of gold and in denominations thereof.
 The tenor of the bonds is 8 years. On maturity the value of the bond may be
higher or lower depending upon the prevailing price of the gold.
 The bonds bear an interest rate of 2.75% p.a on the initial investment and will be
paid semi annually. To the account of the bond holder.
 RBI will provide the information about the issue price based on the previous weeks
price of the gold.
 The bonds are available for investment by resident individuals, HUFs, Trusts ,
Universities and others.
How to Apply?
Investor can apply for the bonds online through the website of listed scheduled
commercial banks or physically through the designated bank or post offices. The bond
can be held in physical form or dematerialized form.
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 Early redemption is allowed only after fifth year from the date of issue.
 Minimum investment is 2 grams and the maximum is 500 grams per eligible
investor for each fiscal year.
 Joint holding, nomination and the facility of marking lien is available on these
bonds.
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II National Saving Certificate(NSC): -
 NSC are issued by the government and available for purchase at post office.
 Scheme specially designed for Government employees, Businessmen and other
salaried classes who are Income Tax assesses.
 These are issued for a tenors of 5 years and 10 years. The interest on these
instruments for 2015-16 is 8.5% for the 5 year bond and 8.8% for the 10 year bond.
Interest is compounded half yearly and accumulated and paid on maturity.
 The certificate can be bought by individual on their own account or on behalf of
minors.
 NRI, HUF, Companies, trusts, societies, or other institutions are not allowed to
purchase the NSCs.
 If a resident holder becomes an NRI subsequent to the purchase, the certificate can
be held till maturity.
 Joint holding is allowed and the certificate can be held jointly by up to two joint holders
on joint basis or either or survivor basis.
 Certificates are available in denominations of Rs 100, 500, 1000, 5000,10000.
Minimum investment is Rs 500 without any maximum limit. The certificate can be
brought by cash or through cheques or demand draft.
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Potential Benefits Of National Saving Certificates.
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 Investment made in NSC VIII issue and IX issue enjoys tax benefits under section
80C of Income Tax Act 1961.
 Accrued interest is taxable but it is deemed to be reinvested and therefore the
interest becomes eligible for section 80C benefits.
 There is no TDS on redeeming the certificate value.
 NSCs can be transferred from one person to another with the consent of designated
officials of the post office under situations such as court order, to near relative such
as wife, transfer to bank, housing company , or other institutions as security.
Premature Encashment: -
 It is allowed only in case of death of the holder, or under order of court.
 If the encashment happens within a period of one year from the date of certificate,
only the face value is paid.
 If the encashment happens after one year but before three years, simple interest is
paid at the rate applicable to post office.
 After three years the certificate will be encashed at a discounted value specified in
the rules.
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Few Other Benefit Of NSC
 Nominations is allowed in the certificates which can be done at the time of
purchase or subsequently.
 There shall be no nomination allowed on the certificate held on behalf of a minor.
 A nomination can be cancelled or changed by making an application to this effect
at the post office where the certificates stands registered.
 The certificates are also accepted as collateral for taking a loan. Recently
government has enabled holding NSCs in demat form.
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I Corporate Bonds: -
 These are the debt instruments issued by private and public sector companies.
They are issued for tenors ranging from two years to 15 years.
 The more popular tenors are 5-year and 7-year bonds.
 Most corporate bonds are issued to institutional investors such as mutual funds,
Insurance companies, and provident funds through a private placement of
securities.
 Companies may also raise funds from the public by making a public issue of bonds
where retail investors are called upon to invest.
 Bonds of all non-government issuers come under the regulatory purview of SEBI.
They have to be compulsorily credit rated and issued in the demat form.
 The coupon interest depends upon the tenor and credit rating of the bond. Bonds
with the highest credit rating of AAA, for example are considered to have the
highest level of safety with respect to repayment of principal and periodic interest.
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II Infrastructure Bonds: -
 The government announces from time to time, a list of infrastructure bonds,
investment in which eligible for deduction u/s 80C of income tax act.
 Bonds issued by financial institution like industrial development bank of
India(IDBI), India Infrastructure Finance company limited(IIFCL) and National bank
for agriculture and ruler development(NABARD) are eligible for such deduction.
Who Can Apply?
 Hindu undivided families and any Indian resident who is not a minor can invest in
these bonds.
 A person should ideally submit only one application. Multiple applications will be
aggregated based on the permanent account number or PAN.
 The tax benefit will be allowed only on investment up to Rs 20,000. The bonds can
be held both in demat and physical forms.
CAP/Lock In Period: -
 The minimum investment is Rs 5,000.
 There is no cap. However, income tax deduction is available only up to Rs 20,000.
The bonds have a long maturity period of 10-15 years.
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However, companies offer a buyback option, wherein the investor can surrender the
bonds after five years without sacrificing his interest income. The bonds are listed on
stock exchanges and can be traded after the five-year lock-in period.
Interest
The issuers cannot pay more than the yield on government securities of same
maturity. At present, 10-year government bonds are offering 8.5-9%. The interest is
paid either annually or cumulatively.
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