investment is to mature is important for a family that plans to have funds available for a known future need. Therefore, while investing money, families should purchase securities of lengths and durations so that they mature close to the time of the envisaged need or needs, e.g., for the child’s higher education. (vii) Tax efficiency: Investments should be made in those instruments which lead to tax saving. A number of provisions in the Income Tax Act can be used to save taxes.
Investment in insurance policies, Employees Provident Fund, PPF, etc., have built-in tax rebates with a specific ceiling limit. (viii) After investment service: While selecting an investment instrument, customer care or customer service must be a critical decision-making factor. Good customer care includes easy encashability of securities, good communication network, timely dispatch of interest or dividend warrants, timely disbursal of the due amount after completion of investment period, keeping the customer posted about changes in the policies, interest rate, etc. A customer-friendly company provides the needed support and protection to the investor as and when required.
(ix) Time period: The “lock in” period is a critical aspect to be considered before deciding on an investment. The longer the period of investment the higher is the rate of return. For example in most fixed schemes the rate of interest is higher for long-term deposits compared to short-term deposits. Thus the investor must choose between a higher return with a longer waiting period or a comparatively lower return for a short lock- in-period, based on the needs and requirements of his/her family.
(x) Capacity: One should not invest beyond one’s capacity so that the investments can be free of undue hardships. It is important to balance present needs with future needs and security.