Saving Schemes – Types and Benefits of Savings Schemes in India

Despite a plethora of investment options available to you, it’s important that you first decide on your investment goals. Knowing what you want to achieve gives you a direction to move in and minimises losses. If the goal is to maximise profit, for instance, you can choose from the various short-term, high-risk investments such as mutual funds. On the other hand, if your aim is to grow your finances through safer avenues, your best bet is a saving scheme.


Saving schemes are investment options that are offered by the Government of India, banks or other financial institutions. They have varying tenors, interest rates and tax benefits, but most importantly, they offer complete security for the invested capital. These low-risk options are excellent if you want to cultivate an investment habit, and they reward you with good returns as well, provided you choose the right vehicle. Here’s a look at 4 instruments that are worthy of your consideration.
National Savings Certificate
The minimum investment amount for a National Savings Certificate, a savings bond, is Rs.100. It has a lock-in period of 5 years and no limit on how much you can invest. Additionally, this low-risk investment option offers 8% interest, but you can’t prematurely withdraw funds before the term is complete. You can apply for one through a post office, and any investment made toward a National Savings Certificate is eligible for tax deductions up to Rs.1,50,000 under Section 80C.
Public Provident Fund (PPF)
PPF is a long-term investment option that matures after a tenor of 15 years and is backed by the Government of India, making it very safe. Additionally, the term for this investment can be indefinitely extended in blocks of 5 years. With an attractive interest rate of 8%, and a minimum investment amount of Rs.500, just about anyone can invest in PPF. PF Accounts also allow partial withdrawal from the 7thyear onwards, and you can take a loan against it too. This investment enjoys EEE status, which means that the investment amount, interest earned and maturity proceeds are not taxed.
Post Office term deposit
A Post Office term deposit or POFD is similar to an FD offered by a bank or an NBFC. You can invest at a post office and choose a tenor ranging from 1–5 years. The minimum investment amount for a POFD is Rs.200 and there’s no limit on how much you can invest. Up to June 2019, the interest that this investment yields is up to 7.8%, depending on the tenor you choose. Moreover, if you invest in a 5-year term deposit, you can get a tax break of up to Rs.1,50,000 as per Section 80C.
Post Office Monthly Income Scheme
Another investment option offered by post offices is the Post Office Monthly Income Scheme or POMIS. This instrument offers monthly interest payouts depending on the principal you invest, allowing you to supplement your income. You can invest up to Rs.4.5 lakh as an individual, or Rs.9 lakh jointly. The investment tenor is 5 years and the interest rate is 7.3%. The minimum investment required is Rs.1,500 and the interest income you earn is subject to taxation. However, you can make premature withdrawals postthe first year by paying a penalty, if you wish to.
Making use of such schemes is an excellent way to grow your corpus. In fact, once investments like PPF mature, you can re-invest the amount in a secure instrument that offers substantial returns such as a senior citizen FD, for instance, and secure your post-retirement years further. Use an FD Interests Rate Calculator to see how FD interest rates from different issuers compare and pick one that offers the best interest. The Bajaj Finance Senior Citizen FD is one of the best options as it has a high credit rating and interest rates. For instance, a 36-month FD with interest payable at maturity yields 9.10% interest for senior citizens and 8.75% for regular investors. Apart from this, Bajaj Finance also offers online investment management and an extra 0.25% interest on renewal. Moreover, you can avail payouts at regular intervals too, to meet expenses such as lifestyle or healthcare costs. Applying for one is easy, as all you have to do is fill an online form.
Use these schemes to your advantage and invest today for a financially secure tomorrow.

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