Pre-Tax Yield

My brother says that the investment in public provident fund (PPF), which gives 8 per cent, is the best. Isn't 8 per cent a low rate of return?

An investment's pre-tax yield tells us if its return is high or low. The return on PPF (8 per cent) is tax-free. Also, this has to compared with returns of a taxable income to estimate its worth. For someone paying a tax of 30.9 per cent, the pre-tax yield in PPF is 11.57 per cent. At present, there is no fixed, safe and assured-return option that has 11.57 per cent return and a post-tax return comparable to PPF's 8 per cent.

Formula: Pre-tax yield = ROI / (100-TR)*100

Type in: =8/(100-30.9)*100 and hit enter. You will get 11.57%.

ROI: rate of interest,

TR: tax rate, (depends on tax slab)

Also used for: Calculating the yield on an Employees' Provident Fund or any other tax-free instrument.

SBI Magnum Tax Gain Scheme 1993 Applcation Form

https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.

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Invest in Tax Saving Mutual Funds	Download Any Applications
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