Posted on: 06-01-10 05:39:03
ritz3645: You are wrong. Fixed deposits in public limited companies in India are UNSECURED loans!
According to mutualfundsindia.com, " Companies have used fixed deposit schemes to mobilize funds for their operations and pay interest on them. The safer a company is rated, the lesser the return offered has been the thumb rule.
However, there are several potential roadblocks in these. First of all, the danger of financial position of the company not being understood by the investor lurks. Investors rely on intermediaries who more often than not, don’t reveal the entire truth. Secondly, liquidity is a major problem with the amount being received months after the due dates. Premature redemption is generally NOT entertained without cuts in the returns offered and though they present a reasonable option to counter interest rate risk (especially when the economy is headed for a low interest regime), the safety of principal amount has been found lacking. Many cases like the Kuber Group and DCM Group fiascoes have resulted in low confidence in this option."
I don't understand how any of these investments would benefit the OP.
If he's a Canadian and investing in India, the high interest rates in India won't help because he'd lose any benefit during currency conversion back into CAD.
If he's living in India, then the interest rates are in line with the rate of inflation and rising cost of living there.
In general, interest rates for secure, risk-free investments like Govt. of India bonds/deposits can never be significantly higher than the rate of inflation over the long run.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
If you put 6 lakhs (maximum allowed in joint account) in post office MIS in India, you get Rs. 4000 p.m at 8% interest rate.
So, you require upwards of Rs. 60 lakhs for an income of 40,000 per month without putting in a calculation for tax.
Interest rates have come down in India and inflation is quite high, so when you go to renew your fixed deposit after a few years, your expenses would have gone up and interest rates could have come down.
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Quote:
Originally posted by pratickm
I don't understand how any of these investments would benefit the OP.
If he's a Canadian and investing in India, the high interest rates in India won't help because he'd lose any benefit during currency conversion back into CAD.
If he's living in India, then the interest rates are in line with the rate of inflation and rising cost of living there.
In general, interest rates for secure, risk-free investments like Govt. of India bonds/deposits can never be significantly higher than the rate of inflation over the long run.
This is very correct.
Quote:
Originally posted by kapilmalik
I was wondering how much money will required to retire in India and live of on interest/investments ? I have done a small math and i would require about Rs/- 40000 PM cover my monthly expense including entertainment, grocery, rent electicity, phone bill and trips to different places 2-3 times a year. What are FD Rates in India and Taxes on them ?
I think this depends on your age,financial commitments , standard of living and the place you choose to live. As of today Rs.40000 is decent amount and with fd rates you would need around 50-60 lacs. Tax wise India is going to be a friendly country from 2011 onwards, With the new direct tax code likely to pass you will be paying only 10% tax for the annual income of 10lacs.
I feel retiring in India is a feasible thing if you can move out of Indian Metros or cities
\\\"ILOVENA
ritz3645: You are wrong. Fixed deposits in public limited companies in India are UNSECURED loans!
According to mutualfundsindia.com, \\\" Companies have used fixed deposit schemes to mobilize funds for their operations and pay interest on them. The safer a company is rated, the lesser the return offered has been the thumb rule. \\\"
Reply to ILOVENA
ILOVENA please do not call me wrong.... your source is mutualfundsindia which is in the business of promoting mutual funds. I hope you have knowledge of companies which are \" registered public limited companies\"....The Fixed deposits are debentures and i have seen and invested in this company (SRIRAM Transport)for long. I am not aware of Kuber/DCM fiasco, but to let you know my friends father worked all his life at DCM Delhi. Do not be scared of fixed deposit schemes, just choose your company wisely, that goes even for mutual funds rite.
In India even if you have NRI status taxation is high, banks do not give attractive rates like before, how do you avoid the trap, investment in wife's name, and the golden rule never put all your eggs in one basket, gold, real estate, liquid etc.
Yes ICICI/HDFC are selling financial products but do they guaranteed return ?
I never bank with any private bank in India, only Union Bank Of India...good people to bank with.
Quote:ILOVENA is correct.
Originally posted by ritz3645
Reply to ILOVENA
ILOVENA please do not call me wrong.... your source is mutualfundsindia which is in the business of promoting mutual funds. I hope you have knowledge of companies which are \" registered public limited companies\"....The Fixed deposits are debentures and i have seen and invested in this company (SRIRAM Transport)for long.
Debenture (secure or unsecure) is still not a risk-free security.
It still depends on the solvency of the company.
The last 2 years have shown us that no company is safe from total collapse, no matter how big and powerful.
Even if a note is secured (like a bond or secured debenture), if a company does go bust, it could take years to get your money back.
ILOVENA is also right that The safer a company is rated, the lesser the return offered has been the thumb rule.
Higher yields come to higher risk.
No company out there is in the charitable business.
Yields that are higher than average are high because of a reason.
As an investor you may accept the risk if the reward is attractive enough and of all goes well, you'll come out ahead of the average market.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
