MoneyVedam

What is an annuity? An annuity is a fixed stream of income for a certain defined period of time. Similar to pension, annuities provide regular income stream during retirement years. Annuitization is the process where by you pay a lumpsum accumulated from years of savings in a plan (such as NPS, deferred pension plans etc) to buy an annuity product which would pay out regular cash flows primarily during your retirement years. One who receives such a payout is called the annuitant. There are several variants of annuity plans available depending on your preference for payout tenure, increments desired, continuing payouts for spouse in case of death of annuitant etc. Types of annuity Immediate annuity - pay with lumpsum & start receiving annuity immediately (eg. LIC Jeevan Nidhi) Deferred annuity - a savings plan where you save some amount every year for 5,10,20 years & then start receiving annuity from the deferred date (eg. UTI pension); Annuity certain - receive a fixed

Non-Convertible Debentures are debt instruments sought by investors in bonds. These bonds cannot be converted into equity at a later stage and hence the name "non-convertible". These instruments are gaining popularity in the recent 3 years due to higher returns they offer compared to long term bank FDs. Typically infra companies and NBFCs (Non-Banking Financial Companies) issues NCDs. If the cost of raising debt for such companies gets higher or if they have exhausted their existing credit lines, then such companies issue NCDs to raise funds from public. Most of the NCDs issued are secured, but there are also unsecured NCDs - you need to check for this info in each issue. Unsecured NCDs have higher risk than secured NCDs and carry a higher risk premium. Features Debt is "secured" against assets of the issuer (for Secured NCDs) Liquid instrument as it is traded in secondary markets Suited for medium tenure of 3 to 6 years Need demat account to purchase NCDs a

This is the latest product launched by RBI in an effort to wean retail investors away from physical assets to financial assets. Since inflation has been a record high in the recent 5 years, Indian investors have been shifting to gold and real estate to protect their savings from inflation. This has dented our current account deficit quite significantly in the last two fiscals. Inflation Indexed National Savings Scheme - Cumulative (IINSS-C) is an alternative to physical assets (gold & property) to motivate retail investors to save in an asset that provides "real rate of returns", one that does not get eroded by inflation. How does it work? Typically a fixed interest is paid on a bond (called coupon). A Rs.1000 bond that pays 8% interest p.a looks good but if inflation (as measured by CPI) is 10%, your real rate of return is negative. In the case of IINSS-C, the interest is the sum of a fixed interest (1.5%) and CPI (consumer price index) of the preceding 3 months, com