When you get into a habit of saving, you enjoy greater security in life and are well-prepared if something unexpected happens in life. There are many financial instruments through which you can save money for your future goals. You can invest money in equity-related or debt-related schemes, or you can invest in fixed deposits, traditional and online savings and investment schemes, etc. We are going to discuss the saving schemes in detail here.
Saving schemes are financial instruments launched by the Government of India (or public/private banks) to help you achieve your financial goals over a particular period. Different saving schemes have different purposes, and they vary in their investment horizons, interest rates, and tax benefits. Choosing the best saving and investment scheme online means you have to assess your risk appetite and financial affordability.
The returns from the best saving and investment schemes in India are secured since most of them are backed by the Government of India. It is a low-risk investment option that provides you good returns. The interest rate of saving and investment schemes changes from time to time and is decided by the government. The government revises the rates every three to six months.
When you decide to invest in saving schemes, there are several options you can choose from depending on your financial needs and your goal duration. Below is the list of different saving and investment schemes you can invest in:
It is a government-backed saving scheme designed to offer you guaranteed returns along with a tax-saving option. The scheme has a lock-in period of 5 years, you can invest accordingly in the NSC. Prominent features of NSC include:
You can think of this saving and investment scheme as a regular savings bank account. The difference is that in this saving and investment scheme you will get higher interest on deposits. It is one of the best investment options for you if you have a low-risk appetite. The process of investment is very simple. Once you invest in the saving scheme you start receiving fixed monthly income in your savings account. Below are important point related to the scheme:
Learn more about Postal Life Insurance Scheme
The SCSS is designed keeping in mind the unique needs of senior citizens of India (individuals above 60 years of age). Individuals who have retired early or have opted for Voluntary Retirement Scheme (VRS) and between 55 and 60 years are also eligible for this best saving and investment scheme. Features of this scheme are:
You can invest in Kisan Vikas Patra online or by visiting your nearest post office. This saving scheme is very popular since on maturity you receive an amount double of your investment. Features of this saving and investment scheme are:
The scheme was launched by the Prime Minister of India to secure the future of girl children in India. You can open an account for your girl child aged below 10 years. Important points related to the scheme are:
Learn more about Sukanya Samriddhi Yojana
NPS is an initiative by the Central government that aims to give a reliable and secure source of monthly income after retirement. National Pension Scheme is considered one of the best online saving and investment schemes in India. You can easily register online by visiting the portal and open an account using your AADHAR details. The amount of contribution in this saving and investment scheme is from your monthly salary. Your employer contributes an equal amount equal to your contribution.
EPF is a long-term saving scheme that offers you financial security post-retirement. The employer and employee contribute 12% of the monthly salary in the PF account. The interest rate in this scheme is 8.5%. Your contribution to this scheme is eligible for tax deduction under Section 80C.
Your monthly EPF contribution is divided under the following heads towards different objectives:
With this scheme, you can make an additional contribution of up to 100% of your basic salary and dearness allowance over and above your contribution to the EPF. You get an interest rate of 8.5% (at present) on your investment in this scheme.
Only salaried employees are eligible for VPF contributions. This option is usually available to the employees of specific institutions or those who receive their salaries through a specified salary account.
This is a saving scheme tailor-made for people below the poverty line. The account holder can make use of the scheme for reinvestment. It is highly suitable for people below the poverty line because they don't have to maintain any minimum balance in their accounts. As part of this saving and investment scheme, they receive accidental insurance of Rs 1 lakh and a life cover of Rs 30,000.
Learn more about Pradhan Mantri Jan Dhan Yojana
Below are some of the advantages of investing in saving schemes:
Below are the interest rate offered by different saving schemes:
|Scheme||Interest Rate offered|
|National Scheme Certificate||6.8%|
|Post Office Monthly Income Scheme||6.6%|
|Senior Citizens Savings Scheme||7.4%|
|Kisan Vikas Patra||6.9%|
|Sukanya Samruddhi Yojana||7.6%|
|National Pension Scheme||5 to 12%*|
|Employees Provident Fund||8.5%|
|Voluntary Provident Fund||8.5%|
From the above table, you can conclude, the interest rate of interest is offered by EPF and VPF schemes.
The best saving and investment schemes in India, as we have seen, are financial instruments that help you achieve your financial goals by investing in instruments that give fixed and guaranteed returns. On the other hand, saving plans are a life insurance plan that also helps achieve your short and long-term goals and provides insurance coverage.
Some of the best online saving and investment plans in India are offered by life insurance companies including Canara HSBC Oriental Bank of Commerce Life Insurance.
Following are the differences between the two:
|Feature||Saving Schemes||Saving Plans|
|Purpose||Secured returns||Good returns with life cover|
|Risk Level||Low||Depends on the type of product|
|Investment Tenure||Short to long term||Long term|
|Returns||Low to medium||Medium. Depends on the product|
|Fixed Returns||Yes||Not always|
Below are three easy and quick steps you can follow to find the best online saving and investment scheme in India:
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Small saving schemes are investment plans launched by GOI to promote savings and provide a venue for small savers to grow their money. These schemes are commonly offered by all Post Office branches and scheduled nationalized banks. These schemes usually do not deduct TDS on invested money.
Senior Citizen Savings Scheme (SCSS) and PPF are two of the best saving schemes for 60+ investors. SCSS allows lump sum investment of retirement benefits up to Rs. 15 lakhs for retirees aged 55 years. Both schemes offer a safe return on investments and tax savings on invested money.
Any Indian resident over 18 years of age can open a PPF account. There is no maximum age limit to open a PPF account which means even senior citizens can invest in PPF.
Yes, most savings schemes are transferable including NSC. You can transfer your NSC account from the current bank to any other bank (or post office) across India. Only when your NSC account has reached maturity, you are not allowed to transfer your account.
Yes, the interest you receive on NSC is taxable. Your investment in NSC is deductible under Section 80C of the Income Tax Act. The interest you receive every year is re-invested, and it comes under Income from Other Sources and hence taxable.
Employees saving plans are offered by an employer to their employees in which they can invest a part of their income for their short and long-term goals.
Ministry of Finance announces PPF interest rates every quarter. For the quarter of April-June 2021, the PPF account has an interest rate of 7.1% per year.
No, the interest rate may change from time to time for these schemes. Usually, the government updates the interest rate every 3 to 6 months.
There is a wide variety of saving schemes and you can choose one depending on your financial situation. Assess your financial milestones and how well you have been aligned to the goals, choose a scheme accordingly. You can also consider best saving plans to fulfil your financial and protection needs. Saving cum protection plans offer you life cover along with an avenue to create wealth that can be used later.
There are a few saving schemes that offer tax exemption to the investors and they are:
TERM Insurance PLAN
Life Cover till 99 years of age
Option to Block the premium rate and increase cover by upto 100% at the blocked rate
Option to avail monthly income post attaining 60 years of age
Option to receive total premiums paid in case of no claim
Tax Benefits as per applicable laws
Unit Linked Insurance Plan
8 funds and 4 portfolio strategies to invest
Loyalty additions and wealth booster
Return of Mortality Charge is available on Maturity under all three cover Options
Flexibility of switching between the fund options to take benefits of market movements or change in risk preference