Different Types of Small Saving Schemes

Good news for the investors is the interest rates on small saving schemes are not reduced. We know that there are many small saving schemes in the market however it would be unwise if you simply plunge into the scheme and invest without knowing the pros and cons of the schemes. Considering your financial portfolio, you should invest in such a scheme that would suit you the best.

Some of the small saving schemes are discussed as under:

1. Public Provident Fund (PPF)

If you invest in Public Provident fund, you will get assured returns. The longevity is the best part of PPF. There is a tenure of 15 years and the interest rate is 7.8%.  The interest earned is tax-free. This tenure can be increased in a block of five years. After the completion of 15 years, the investor is left with three options – continue with the account without further investment, continue your investments in the account or withdraw the corpus. On annual investment, there is a cap of Rs 1.5 lakh. Persons who are non-salaried and does not enjoy retirement benefits, the PPF suits them the best. It is recommended for self-employed professionals like doctors and chartered accountants.

2. Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana provides a higher rate of interest than PPF. If you are a parent of a daughter who is below 10 years, then it is a better option for you.  With a minimum investment of Rs. 1000, you can invest in post offices or banks. Like PPF, the interest is tax-free. However, if you are planning for a long-term investment then Sukanya Scheme is not that good for you since it is debt base. Equity-based investments can give better returns. Hence you should invest in other schemes along with Sukanya Samriddhi Yojana. However, you can save for your daughter’s education and marriage under this scheme.

3. National Savings Certificates

If you invest in the NSC, there is no cap on it however, the interest earned is fully taxable.  Every year, the tax will be deducted from the interest that is accrued on NSC.  The deposit rates for the regular investors are between 7 to 7.2%. So, many people tend to invest in NSCs now however, you have to take the pain of standing in long queues at Post office if you would like to invest in NSCs.

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