post office
In India the post office offers a variety of savings schemes that cater to different financial goals and preferences. These schemes are considered a safe and reliable option for investors given the backing of the government. Here, we will explore the best post office savings schemes discussing their features and benefits.
Post office savings schemes
One of the most popular and widely used schemes is the Post Office Savings Account. This account works pretty much like any saving account in a bank, save for the added benefit of it providing higher interest rates than a traditional saving account would. Interest earned is compounded every quarter, and one can put in or withdraw as and when need be. With a minimum deposit requirement of Rs. 500, it suits all looking for flexibility and safety. This is generally comparable to that of the bank savings account. The interest rate of this account is reviewed quarterly.
The other very popular saving scheme at the post office is the Public Provident Fund (PPF). PPF is long term investment offering tax benefits under Section 80C of the Income Tax Act. It is best to save money for retirement or other long term goals. It’s a 15-year term account but can be extended in 5-year blocks. PPF also accrues tax-free interest. The amount contributed to the fund may also be claimed as a tax deduction. The rate is very attractive and compounded annually. Bottom line it’s an investment tool for conservative investors due to carrying almost negligible risk and returns that are guaranteed by the government.
There is the Senior Citizens Savings Scheme (SCSS) such a scheme is made specially to provide for those aged 60 retirement-saving need. This scheme, therefore provides another platform with which the retired can continue accruing income regularly, since such a scheme enjoys a greater interest rate as compared with the normal saving account as a source of saving. This scheme offers an account opening with a minimum of Rs. 1,000. The maximum deposit amount will be Rs. 15 lakhs. The time frame in this scheme is 5 years, which can go up to 3 years additional. This scheme also avails tax benefits under Section 80C and is one of the best options for senior citizens.
Fixed return is always on the preference list of many. In their case, the alternate best will be the Post Office Time Deposit, popularly known as TD. As far as the interest component is concerned, this rate is fixed at the date of investment. This time deposit can be kept locked for a period between 1 year and 5 years. For this, interest is paid annually or, alternatively, at the end of tenure. Unlike savings accounts, the rate of returns on a Post Office Time Deposit is comparatively higher. This scheme will be for those who can lock in money for some time and want a fixed return on their investment.
The Post Office Monthly Income Scheme is meant for anyone who wants to gain regular income out of his investment. This scheme offers a fixed monthly income to the investors as its name itself indicates. The minimum investment in MIS is Rs. 1,500. An individual’s maximum investment limit is Rs. 4.5 lakh and in joint account, Rs. 9 lakh. It pays interest on a monthly basis and therefore, may be of a lot of help to the retired persons or any other person in need of cash flow regularly. Interest rates are competitive and the scheme is for 5 years tenure. The amount so deposited can be withdrawn or the amount reinvested after a period of 5 years.
In the eyes of the people who look to invest money with assurance of safe return along with an adequate reward, one comes across the Kisan Vikas Patra (KVP). This KVP is a savings bond issued that doubles the amount placed with it in a predetermined time. KVP has a maturity of 10 years and 4 months, assured return, and hence is an extremely safe investment. The minimum amount that one can invest in KVP is Rs. 1,000, but there is no upper limit. KVP is very popular among rural investors who have a penchant for low-risk investments with long maturity.
The last one is the National Savings Certificate, NSC, which is very much liked by post office schemes and hence taxpayers also to bring taxable income. Section 80C gives tax benefit as well as an excellent investment for people who need a fixed and safe amount after 5 years of period investment without any fear. Interest that was earned from NSC is taxed and the same gets compounded annually. It is a great option for investors who are concerned about safety and tax benefits in addition to guaranteed returns.
All these post office schemes have their advantages pertinent to the specific financial goals of the individual. For example, PPF as well as NSC are suggested for those looking for long-term growth with tax advantage. For people who need a regular income, the best options would be Senior Citizens Savings Scheme and Monthly Income Scheme. The Post Office Savings Account offers flexibility, whereas time deposit offers fixed returns. Of course, the best scheme will all depend on an individual’s specific needs, which either be long-term growth or regular income or tax-saving benefits.
In all, postal saving schemes are safe and risk-free investments that encourage savings. This scope provided can be compared to the aspirations of individuals regarding their financial goals as well as the appetite for risks of a specific period of investment. This protection by the government increases a layer of safety; thus, it becomes attractive for investors in India.
