The government offers investment schemes to channelize the savings in an economy. When an individual saves more, they ultimately want to invest it somewhere safe and secure, which will also provide decent returns. In terms of safety, what’s better than a government scheme, right?
This article will provide you with insights into the best government investment schemes that are suitable for kids’ education from retirement. It will help you identify which is the best fit for you based on your investing needs.
1. Public Provident Fund (PPF)
One of India’s most reliable long-term savings options is the Public Provident Fund. Supported by the Indian government, it provides triple tax advantages in addition to attractive interest rates, making it the perfect choice for people wishing to build a retirement fund or accomplish long-term objectives with little risk.
Key Features:
- Interest rate: 7.1% annually compounded
- Lock-in Time: 15 years, can be extended in 5-year increments
- Rs. 500 annually is the minimum investment.
- The annual maximum investment is Rs. 1.5 lakh.
- Tax Benefit: EEE status (Section 80C Exemption on Investment, Interest, and Maturity)
- Ideal For: People on a salary, long-term financial advisors, and parents putting money aside for their kids’ future
2. Senior Citizens’ Savings Scheme (SCSS)
In order to guarantee a consistent income after retirement, SCSS was created especially for senior citizens. It is accessible through banks and post offices throughout India and has one of the highest interest rates of any fixed-income option.
Key features:
- Interest rate: 8.2% p.a. paid quarterly
- Tenure: five years, with a three-year extension
- Rs. 1,000 is the minimum investment.
- Rs. 15 lakh is the maximum investment.
- Tax Benefit: Up to Rs. 1.5 lakh in deductions under Section 80C (Investment principal only; interest earned is taxable).
- Fit for: People 60 and older, retired workers in the public and private sectors, and those seeking a steady and fixed income.
3. National Savings Certificate (NSC)
The NSC is a fixed-income savings plan that promotes tax and small-scale savings. It offers assured returns over a five-year period and is perfect for mid-term objectives.
Key features:
- The interest rate, which is compounded annually and paid at maturity, is 7.7% per annum.
- Duration: 5 years
- Rs. 1,000 is the minimum investment.
- No upper limit
- Benefit from taxes: qualified under Section 80C up to Rs. 1.5 lakhs
- Ideal For: Investors Who Are Risk Averse, salaried people looking for tax advantages, and kids’ education purposes.
4. Kisan Vikas Patra (KVP)
A savings certificate program called KVP guarantees that your money will double over a predetermined time frame. Because of its simplicity and guaranteed returns, it is particularly well-liked in semi-urban and rural areas of India.
Key features:
- Interest rate: 7.5% annually compounded
- It will take 115 months (9 years 7 months) to double your investment.
- Rs. 1,000 is the minimum investment.
- No upper limit
- Tax Advantage: Section 80C disqualifies, which means it is not applicable.
- Fit for: Households in rural areas, and people looking to safely double their capital
5. Post Office Monthly Income Scheme (POMIS)
POMIS offers a consistent monthly income and is a low-risk savings plan. For retirees or people who wish to save a lump sum and get a fixed monthly income, it is perfect.
Key features:
- Principal Aspects: Interest Rate: 7.4% annually (due each month)
- Duration: 5 years
- Rs. 1,000 is the minimum investment.
- The maximum investment is Rs. 9 lakh for an individual and Rs. 15 lakh for a joint account.
- Tax Benefit: Interest is taxable, and there is no income tax deduction.
- Fit for: Retirement planning, Families with only one income or homemakers, and investors hoping to receive a lump sum payment each month
6. Sukanya Samriddhi Yojana (SSY)
SSY is a government-sponsored savings program that is only available to girls. With one of the highest interest rates among small savings plans, it seeks to support girls’ education and financial stability.
Key features:
- Interest Rate: 8.2% annually (compound)
- 21 years from the date of account opening (partial withdrawal at age 18)
- The minimum annual investment is Rs. 250.
- The annual maximum investment is Rs. 1.5 lakh.
- Section 80C tax benefit; EEE status
- Fit for: Parents or guardians of a girl child (up to 10 years old), Long-term investors setting aside money for a wedding or educational costs
Bottomline
The conclusion can be drawn that the government provides good incentives to provide better investment schemes to its citizens. It is a beneficial deal for both the investors and the governments, as the investors get returns on their capital while the government can use the deposits for the growth of the economy.
However, choosing the right scheme is important to utilize it to its full potential, as every individual has different objectives for investment. Following your friends and family may not appreciate your capital as much as it should.