61) Unit Trust Bond Fund Vs Fixed Deposit
Can add or withdraw any amount, any right time. No penalty for early withdrawal. Interest earned in Bond Fund is not taxable. Net Asset Value change during the whole invested period gradually. Able to switch to other fund types easily. Earnings are higher compared to Fixed Deposit potentially. Easy to manage as can have as few as only one 1 take into account Bond fund.
Can have many connection money for diversification. A Bond fund contains many bonds with different companies, promotion rates, maturity dates, etc. Bond Fund manager in a position to trade bonds to capitalize on market conditions. Returns are not assured or not pre-determined. Have a little Initial Service charge upfront. Similar earnings for different intervals, depending on market situations. Comes back rate not dependent on or shorter period much longer.
Investments are held under a Trustee, separated from UTMC property. UTMC’s legal/financial problems won’t affect Unit Trust investments. Have fixed tenure. Eg. Need to create new Fixed Deposit account when wanting to include more money. Need to fully redeem the full-Fixed Deposit accounts if need to withdraw any amount. Penalty or reduced interest income if need to withdraw.
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Interest income gained from Fixed Deposit may be taxable. Fixed Deposit is saved in one bank. Risk of bank closure. Have to save into multiple banking institutions to diversify. More difficult to control many FD accounts. Returns are low as the risk is also low. Necessary to have multiple Fixed Deposit accounts for different amounts. Fixed Deposit is passive cost savings. You get higher FD interest for longer tenure. Lower interest for shorter tenure.
Also visit a link at the end of this article for details. The interesting rules govern what goes on to after-tax and before-tax contributions. The IRS limits pre-tax deductions to a fixed dollar figure that changes annually. Quite simply, an employee in any 401(k) plans can reduce his or her gross pay by no more than some fixed money amount via efforts to a 401(k) plan.
An employer’s plan may place limitations on the employees that are stricter than the IRS limit. After-tax contributions are very different from pre-tax contributions. If an employee elects to make after-tax contributions, the money comes out of net pay (i.e., after taxes have been deducted). While it doesn’t help the employee’s current taxes situation, funds that were contributed with an after-tax basis may be easier to withdraw since they are not at the mercy of the strict IRS rules which apply to pre-tax efforts. When distributions are started (see below), no tax is paid by the employee on the portion of the distribution related to after-tax contributions, but does have to pay taxes on any benefits. Ok, let’s discuss the IRS restricts already.
500 from 2018. It’s important to comprehend this limit. This figure indicates only the utmost amount that the worker can contribute from his/her pre-tax earnings to all of his/her 401(k) accounts. It generally does not include any matching funds that the employer might graciously toss in. Further, this figure is not reduced by monies contributed towards many other plans (e.g., an IRA). And, if you work for two or more employers through the is, then you have the duty to be sure you contribute only that year’s limit between your several employers’ 401k programs.
If the worker “accidentally” contributes more than the pre-tax limit towards his / her 401(k) account, the worker must contact the employer. The surplus may be refunded or might be reclassified as an after-tax contribution. The utmost before-tax contribution limit is subject to the catch-up provision, which is open to employees who are over 50 years of age.