Investment, Insurance and Taxes: Investment

Investment means that money is spent today with the aim of relaxing financial gains at a future time. The main types of investment options are as follows:

• Bonds: Bonds are instruments used by public and private companies to raise large sums of money - too large to be borrowed from a bank. These bonds are then issued in the public market and are bought by lenders. 
• Stocks: Stocks or equity are shares that are issued by companies and are bought by the general public. 
• Small Savings Schemes: Small Savings Schemes are tools meant to save money in small amounts. Some popular schemes are the Employees Provident Fund, Atlanta Samriddhi Scheme and National Pension Scheme. 
• Mutual Funds: Mutual Funds are professionally managed financial instruments that invest money in different securities on behalf of investors. 
• Fixed Deposits: A fixed amount of money is kept aside with a financial institution for a fixed amount of time in return for interest on the money. 
• Real Estate: Loans are taken from banks to purchase real estate, which is then leased or sold with the aim of making a profit on the appreciated property price. 
• Hedge Funds: Hedge funds invest in both financial derivatives and/or publicly traded securities. 
• Located Equity: Private Equity is trading in the shares of an operating company that is not publicly listed and whose shares are not available on the stock market. 

Insurance 

There are two types of insurance - Life Insurance and Non-Life or General Insurance. 

Life Insurance 

Life Insurance deals with all insurance covering human life. 

Life Insurance Products 

The main life insurance products are:

• Term Insurance: This is the simplest and cheapest from of insurance. It offers financial protection for a specified tenure, say 15 to 20 years. In the case of your death, your family is paid the sun assured. In the case of your surviving the term, the insurer pays nothing. 
• Endowment Policy: This offers the dual benefit of insurance and investment. Part of the premium is allocated towards the sum assured, while the remaining premium gets invested in equity and debt. It pays a lump sum amount after the specified duration or on the death of the policyholder, whichever is earlier  
• Unit-Linked Insurance Plan (ULIP) : Here part of the premium is spent on the like cover, while the raining amount is invested in equity and debt. It helps develop a regular saving habit. 
• Money Bank Like Insurance: While the policyholder is alive, periodic payments of the partial survival benefits are mode during the policy tenure. On the death of the insured, the insurance company pays the full sum assured along with survival benefits. 
• Whole Life Insurance: It offers the dual benefit of insurance and investment. It offers insurance cover for the whole life of the person or up to 100 years whichever is earlier. 

General Insurance 

General Insurance deals with all insurance covering assets like animals, agricultural crops, goods, factories, care and so on.

General Insurance Products 
The main general insurance products are:

• Motor Insurance: This can be divided into Four-wheeler Insurance and Two-Wheeler insurance 
• Health Insurance: The main types of health insurance are individual health insurance, family floater health insurance, comprehensive health insurance and critical illness insurance. 
• Travel Insurance: This can be categorised into Individual Travel Policy, Family Travel Policy, student Travel Insurance and Senior Citizen Health Insut6. 
• Home Insurance: This protects the house and it's contents from risk. 
• Marine Insurance: This insurance covers goods, freight and cargo against loss or damage during transit by rail, road, sea and/or air. 

Taxes 

There are two types of taxes - Direct Taxes and indirect Taxes 

Direct Tax 

Direct taxes are levied directly on at entity or a person and not- transferable. Some example of Direct Taxes are:

• Income Tax: This tax is levied on your earning in a financial year6. It is applicable to both, individuals and companies. 
• Capital Gains Tax: This tax is payable whenever you receive a sizable amount of money. It is usually of two types - short capital gains from investments held for less than 36 months and long term capital gains from investments held for longer than 36 months.
• Securities Transaction Tax: This tax is added to the price of a share. It is levied every time you buy or sell shares. 
• Perquisites Tax: This tax is levied is on perks that have been acquired by a company or used by an employee. 
• Corporate Tax: Corporate tax is paid by companies from the revenue they earn. 

Indirect Tax

Indirect taxes are levied on goods or services. Some examples of indirect Taxes are: 

• Sales Tax: Sales Tax is levied on the sale of a product. 
• Service Tax: Service Tax is added to services provided in India. 
• Value Added Tax: Value Added Tax is levied at the discretion of the state government. The tax is levied on goods sold in the state. The tax amount is decided by the state. 
• Customs Duty & Octroi: Customs Duty is a charge that is applied on purchases that are imported from another country. Octopus is levied on goods that cross state borders within India. 
• Excise Duty: Excise Duty is levied on all goods manufactured or produced in India