(National Institute of Open Schooling)
NIOS CLASS 12 Home Science (321) FREE IMPORTANT NOTES
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Q. Discuss Briefly The Factors Influencing Selection Of An Investment Scheme.
- Your capacity to save: If you are a small saver, invest in a scheme which does not require a large amount as the minimum specification to invest.
- Safety of the investment: To save, you have to often sacrifice some present requirement. You would therefore, definitely want your saving to be safe. Your investment documents should be kept very safely.
- Easy liquidity: There may be times when you suddenly need your money. Easy liquidity enables you to get back your invested saving. There are some schemes where you cannot withdraw your money before a stated period.
- Other benefits: Besides a high rate of interest, there are some other benefits like dividends and income-tax relief which are offered by a few schemes.
- The purchasing power: At the end of the investment period, the increased value of the saving should be equal to or more than the inflation during that period.
- Convenient place of investment: Most investments require paperwork. If the institution in which you invest is at a convenient place, visits can be made easily.
Q. Short note on Debentures.
Debentures are also known as bonds. When you purchase a debenture from a
company, it means that you have loaned the money to the company. In return, the
company promises to pay back the investor not only the amount invested but also
a fixed rate of interest on it at regular intervals.
Q. What is Life Insurance? What are its advantages?
It is a contract under which the insured pays premium periodically. How much the premium will be, will depend upon the total amount of the policy and the number of years for which the policy is drawn up. At the end of the period, the money along with the interest, is returned to the insured. In case the insured dies, the full amount for which the policy is taken, is payable to the person whose name has been nominated by the insured. This person is called the beneficiary.
The advantages are:
- it is a safe investment
- it provides financial protection to the dependents in the event of death or disability
- it is an easy and forced form of saving
- it provides income-tax relief on the paid-up premiums, and
- loans can be taken against money deposited for the policy.
Q. What is General Insurance? What are its advantages?
This covers risks such as theft, fire, flood, drought or any other contingency. The contract is generally made for a year. The insured has to pay the premiums periodically. The amount of the premiums to be paid will depend on the amount for which the contract is drawn up. In case of a loss suffered by the injured, he or she can recover from the insurance company the actual amount of the loss or the amount of policy, whichever is less.
The advantages of this policy are:
- it is an easy and forced form of savings and
- it provides security against loss or risk.
Q. What are the features of Provident Fund?
- Every month, a certain percentage of the basic salary is compulsorily deducted from the employee’s salary. This deduction is the contribution towards the fund.
- An interest is worked on the contribution. A record of the contributed money and the interest earned on it is maintained by the employer. A copy of the same is also given to the employee.
- The money deposited and the interest on it are both exempt from income tax.
- You can take a loan against the money deposited.
Q. Explain the various types of Provident Fund Schemes.
General Provident Fund (G.P.F.) - This is suitable for all salaried people. If desired, the employee can increase the contribution towards the fund. At the time of retirement, the employee gets both, the contribution and the interest, in a lump sum.
Public Provident Fund (P.P.F.) - Any self-employed person can open this account with the
State Bank of India or the post office. The money may be deposited either
regularly in instalments or in lump sum. After five years, the investor can
take back certain percentage of this money. The investor also enjoys income-tax
relief.
Q. Difference between Savings and Investments?
|
Basis |
Savings |
Investments |
|
Needs |
Emergencies or short term needs |
Long term to create wealth |
|
Modes |
Either in Bank Saving Account or other
liquid account |
Buying stocks, Real Estate or purchase of
Bullions |
|
Risk |
Low or negligible risk |
Very high risk |
|
Returns |
Returns are less or negligible |
Returns are good or high |
|
Liquidity |
More Liquid |
Less Liquid |
 CLASS 12 HOME SCIENCE (321) FREE IMPORTANT NOTES){kind=link}
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