Someone has correctly said that earning money is harder but managing is hardest. Though, savings is the only vehicle that can help you achieve your financial goals.
Yet, due to huge dissimilarities between income and expenditures, everyone is not able to save money. So, in order to resolve this problem, the government has launched various small saving schemes in India which will benefit small investors.
These schemes help individuals use a part of their income to secure the future. You only need to make a little contribution and have some patience, it will get you a higher return.
Here, in this article, we’ve mentioned detailed information on the five best investment options.
Why Do People Need to Invest in Small Saving Schemes?
via: Mint
First of all, Small Saving Schemes are the most reliable investment options as they are backed by the government. Besides this, it has a lot of advantages one can count on.
1. Long-term benefits: A middle-class man can easily save money for his long-term goals through this plan such as children’s education or marriage, retirement plan, etc.
2. Lots of varieties: The government has launched various saving plans dedicated to different types of people. So, you can choose accordingly.
For example, Pradhan Mantri Jan Dhan Yojana is specially designed for people below the poverty line. And Sukanya Samriddhi Yojana helps a girl’s parents to secure her future financially.
3. Tax Rebate: Most investors only invest their money to have a tax benefit. And some small saving schemes in India up to Rs.1.5 Lakh also qualifies tax rebates under Section 80C. A tax rebate or tax return is an amount refunded by the government.
4. Control on unnecessary expenses: In order to have a better financial future, every person needs to save 20% of his income every month.
But when a person has all the money in his hand, he can’t save, he’ll spend it on unnecessary things. Here, these small scheme helps you a lot in having control over those expenses.
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5 Best Small Saving Schemes in India
1. National Saving Certificate (NSC)
via: iStock
National Saving Certificate (NSC) is one of the best tax-saving investment options launched by the government. Any single adult can open it with a minimum amount of 1,000 to no maximum limit.
Besides this, it can also open by three adults in a joint account, guardians on behalf of a minor, and even a minor above 10 years old.
However, the interest rate of this scheme is not fixed and is announced by the Ministry of Finance every quarter. According to an analysis, the interest rate will always fall around 6.8% per annum.
NSC is the best government saving scheme for salaried employees because it possesses a very low amount of risk as well as tax benefits under Section 80C.
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2. Public Provident Fund (PPF)
via: Pulse Ghanna
Public Provident fund is another best option for those who want to save money before their retirement. Just like NSC, this scheme also provides tax rebates, safety and higher returns.
Although, the investment limit in the PPF scheme is very limited. You can invest between Rs 500 per year to Rs 1.5 Lakh per year.
But if you are good with its investment limits, then you must choose it over NSC because it provides a 7.1% interest rate. The tenure of this scheme is 15 years and an individual is also allowed to increase it by 5 years further.
3. Kisan Vikas Patra (KVP)
via: Medium
Introduced in 1988 by India Post, Kisan Vikas Patra is one of the small saving schemes in India that allows investors to save for the long term. The interest rate of this scheme is 7.7% which is compounded annually.
An individual can invest from Rs 1,000 to no maximum limits per month. It is a 5-year plan with the extra perk of a tax rebate.
And the best part about this scheme is that it is transferable from one to another and you can add nominees to it. If you buy 10 years plan, your saving will get double in its 10th year.
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4. Post Office Monthly Income Scheme (MIS)
via: The motley fool
In Post Office Monthly Income Scheme (MIS), an individual has to deposit a particular amount from his salary on monthly basis. It is a simple saving scheme for employees in which they can invest from Rs 1500 to Rs 4.5 lakhs. its tenure is between 5 to 10 years.
The current interest rate of MIS is 6.6% and it has no tax rebate benefit. If you close your account between 1 to 3 years, 2% of your amount will be deducted. And if you close after 3 years, 1% will be deducted.
Apart from some disadvantages, this is the best saving plan for those who can’t control their expenses and earn only once a month.
Also Read: 7 Best Investment Options For Every Type Of Investor
5. National Saving Time Deposit Schemes (TD)
via: Adobe Stock
National Saving Time Deposit Scheme is another investment option which is very popular in rural areas. The outstanding thing about this plan is its interest, which increases by every financial year. It is a five-year plan and its interest starts from 5.5% to 6.7%.
| Period | Interest Rate |
| 1st year | 5.5% |
| 2nd year | 5.7% |
| 3rd year | 5.8% |
| 5th year | 6.7% |
You can open this account for only Rs 1,000 and there is no maximum limit. Apart from this, it qualifies for the benefits of Section 80C of the Income Tax act.