What is the actual yield on the 9 per cent annually compounded return?
If you are in the 32 % bracket, the tax equivalent yield amounts to 13.23 per cent. It amounts to 11.53 per cent and 10.00 per cent, if you are in the 22 per cent or 10 per cent tax brackets. This means that if you want a similar return, you will have to scout for an investment that offers you these returns putting the risk factor at the forefront. What is the investment leeway offered? You can invest anywhere from Rs 100 to Rs 60,000 in a year. This can be put in one lumpsum or a maximum of 12 monthly installments, but it should be in multiples of Rs 5. In fact, you can use the PPF account as a recurring deposit by making it a point to put aside a fixed amount from your income every month. Unlike a bank recurring deposit, you don’t need to put the same amount every month. Since the amount invested will vary month-to-month and year-to-year, how is it computed? The rate of interest will be calculated on the lowest balance in the account between the close of the fifth day and the end of
