This means that the use of the money must be properly invested if one is going to have a future financial security. In India, the post office saving schemes proved to be useful, secure, government guaranteed, and with decent interest rates. These schemes are intended to meet a myriad of economic requirements which range from the retirement period to the education of children. Here in this detailed article, we will try to explain the various saving schemes available in post office and try to provide detail information about the interest rates.
Why Post Office Saving Schemes?
Post office saving schemes are an attractive option for several reasons:
- Government-Backed Security: Again, since these are the schemes from the Indian government, the perceptions from the public in terms of risk taking are considered very secure. Your investment is safe and the chances of default, extremely bleak.
- Wide Range of Products: Currently, the post office has presented various schemes according to clients’ requirements, which may be short-term and long-term schemes.
- Tax Benefits: Some post office schemes are attractively positioned to support tax friendly provision as per the 80C tenets of the Income Tax Act.
- Accessibility: Since they are in thousands being established around the county, one can easily access the schemes even if it is from the rural areas.
Following are the major Post Office Saving Schemes:
1. Post Office Savings Account
Like a normal current account in a bank, a post office savings account is also a savings account. Plethora of choices, easy to get to, and probably the simplest way to put in and take out your cash.
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Interest Rate: Presently, there is 4 percent per annum for the interest rate. This interest is calculated on monthly bases and posted on a yearly basis.
Key Features:
It has been agreed that the minimum amount that a user should maintain in his/her account is INR 500.
It is possible to specify accounts in individual’s name or according to individuals jointly.
Offers passbook facility used for monitoring of transactions.
2. Post Office Recurring Deposit or often called just RD is a special type of deposit account with the post office.
The more common form of the scheme is that of the recurring deposit, a way of making a small saving every month to the bank. This is suitable for people who wish to form the practice of saving at a particular amount of money.
Interest Rate: Interest rate is currently 5 percent. At an interest rate of 8% per annum, compounded on a quarterly basis.
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Key Features:
Minimum amount that can be loaded at one time is INR 100 and there is no limit to the maximum amount that can be loaded.
The simplest account can be taken to maturity after five years.
As it can be seen, accounts can even be opened under the names of persons who do not have legal capacity to enter into contracts themselves.
3. Post Office Time Deposit is also known as the post office fd or post office recurring deposit.
The time deposit scheme is a close impression of fixed deposit schemes provided by the banks. It permits you to invest a large sum of money for a specific period to mature.
Interest Rates:
1 year: 6. 9% per annum
2 years: 7. 0% per annum
3 years: 7. 0% per annum
5 years: 7. 5% per annum
Key Features:
The minimum amount of the deposit that is required is one thousand INR while there is no maximum amount to this process.
It can be said that opening of accounts can be made singly or jointly.
The five-year deposit also vests tax exemptions under Chapter V, Section 80C of the income tax law.
4. National Savings Certificates (NSC)
The NSC is an effective fixed-income investment plan for those investors in the small to mid-income category and are tax-exempted.
Interest Rate: Today it is 7 percent. 7% per annum on a compounded basis, although interest is paid on demand and can be collected monthly.
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Key Features:
Minimum amount required is INR 1000 while there is no upper limit to the amount regards to investment.
The maturity period of the different parts of the bonds is five years.
Gives tax breaks under Section 80C of the Indian Tax laws.
5. Kisan Vikas Patra (KVP)
The KVP is intended for farmers but any farmer wishing to join this Venture must be willing to embrace the following terms and conditions: Its goals involves getting a twofold increase in that investment within a certain time duration.
Interest Rate: The current rate is 7 . At an interest rate of 5% per annum, compounded annually.
Key Features:
Minimum amount that one investor can invest is one thousand Indian Rupees and there is no upper limit of investing.
About 115 months the investment doubles.
Provides an early withdrawal after 2. 5 years.
6. Public Provident Fund (PPF)
The PPF is among the long term investment plans that present good interest rates as well as tax exemptions.
Interest Rate: The current rate is 7 only. 1 percent per annum, and shall be compounded yearly.
Key Features:
Minimum annual deposit INR 500 maximum annual deposit INR 1. 5 lakh.
The maturities shall be fifteen years, with the possibility of its prolongation for five years each time.
It provides an opportunity under the Income Tax Act Section 80C to save taxes and the amount of interest earned on this account is tax exempted.
7. Sukanya Samriddhi Yojana (SSY)
The SSY is a saving scheme supported by the government with an aim of targeting the parents of girl child. It is for the purpose of ensuring the girl child gets financial security on matters education and marriage.
Interest Rate: This rate has been pegged at 8. It yielded a return of 0% per annum compounded annually.
The account comes to maturity at the age of 21 years from the date when the account was opened or when the girl gets married if she has attained the age of 18 years.
8. SCSS is an interesting scheme under which senior citizens can earn interest at the rate of one percent less than the prevailing interest rate for the particular financial year for a fixed deposit for senior citizens.
Some of the government backed savings instrument where available to particular demography are as follows;
Interest Rate: As of now the rate is sitting at 8. 2% per annum and is to be paid at quarterly intervals.
Key Features:
At the minimum, deposit as low as INR 1000 or go upto a maximum of INR 30 lakh.
The term of the contract is five years with a possibility of its extension by three years.
gives a tax exemption under section 80C.
Conclusion
Postal saving schemes come handy for those investors who wish to invest in something that is low risk to fetch them regular and assured returns. Since there exist many schemes, people of all ages are provided for, be it when planning for retirement, a child’s education or just wanting to build up wealth gradually. The basic conditions one looks at before investing are the financial objectives that one has, the time frame within which they want to invest and the amount of risk that they can handle. Sorting out the best post office saving scheme you can finally have the means for financial security for yourself and your family.
