# How I View a Sum of Rs 1 Lac These Days?

by on September 28, 2012

in Finance

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These days, a sum of Rs 1 lac looks like this –

Fixed Deposit for Rs 1 lac @ 9% per annum with monthly interest payout

= Rs 9,000 per annum in interest earned before tax

= Rs 750 per month in interest earned before tax

= Rs 672.75 per month in interest @ 10.3% income tax slab

= Rs 595.50 per month in interest @ 20.6% income tax slab

= Rs 518.25 per month in interest @ 30.9% income tax slab

Since I’m currently in the highest income tax slab, each bundle of Rs 1 lac that I save moves me in the worst case Rs 500+ per month closer to my ere-goal. Save two bundles and I’m suddenly Rs 1,000+ per month closer to my ere-goal.

Psychologically, I think this breakdown into smaller targets seems to have spurred me. Rather than thinking along the lines of “Oh! I still need to save X-gazillion number of rupees and God alone knows when I will get there,” I now have started to think along the lines of “Oh! I only need to save Y bundles and I’m there.” Somehow this line of thinking helps.

Of course, it’s not possible to save a whole new bundle each month but if I can save a good number of bundles per year, all of a sudden that ere-goal doesn’t look all that far away…

Posted on a slow Friday afternoon. And I realize that I am dreadfully overdue on announcing the winner of the September Book Giveaway.

Ravi September 28, 2012 at 5:23 PM

I would like to add 2 more options which can give tax free returns.
If you have demat account, you can purchase NHAI or SBI bonds that are offering 9 and 10%. Now the bond value will be up more than its face value adjusting to the yeild. Nevertheless the options to pay is still good because your returns on those bonds are tax free.

Girish September 30, 2012 at 7:15 PM

Hi Vinaya,
Wow….great, remember the quote “Tiny drops of water make the mighty OCEAN” regarding this.
Keep the blogs flowing..
Girish

Abhay October 2, 2012 at 3:49 PM

You said ‘worst case’ Rs. 500+ per month.
What is your personal opinion on other options to get better returns and that too regularly and also tax efficient?

Vinaya HS October 3, 2012 at 12:23 AM

@Abhay –

Let me see if I can come up with some kind of a comparison table with that data.

Ravi October 3, 2012 at 12:52 PM

Hi Vinay, If you have do cover up on Medical Insurance on topics like how much we need it and what parameters to compare and review of few policies and also description of few terms and other things which many might not understand while taking Medical insurance

Vinaya HS October 3, 2012 at 3:59 PM

@Ravi –

Thanks for the suggestion.

I’ve covered health insurance on and off at http://www.vinayahs.com/archives/tag/health-insurance.

Will see if I can do a series similar to the online terms plans.

Rakesh October 3, 2012 at 4:14 PM

Time to move to other Debt instruments. There are few MF debt instruments which are returned 12% returns over the year but with limited risk.

Chet Kamal Parkash October 23, 2012 at 4:49 PM

How I View a Sum of Rs 1 Lac These Days? ——Instead of going for higher rates and investing high amount, the Better iDea would be invest the sum so that TDS would not be applicable on it.