In case you’re looking to invest in a savings plan that will give you good returns over a sustained period of time, then look no further. Here are the top five for 2018.
Savings can be a bit tricky, especially when you’re just starting out and don’t know how to go about it. In case you’ve been given thousands of complicated ways to save better, and you still can’t seem to figure the whole thing out, don’t worry! We’ll help you figure out what you need to do.
Additional Reading: Your Top 5 Tax-Saving Options For 2018
Let’s start by giving you a list of the top 5 savings plans in the market today. This is a thoroughly researched list, with each of the top 5 rated on different weighted parameters to arrive at a ranked list of products just right for you.
The National Savings Certificate comes out on top in our rankings because of its higher returns and flexibility. National Savings Certificates are available for an investment period of 5-10 years.
The best part of this scheme is that the minimum investment one can make is as little as Rs. 100, while there is no upper limit. The interest rates for NSC (VII) five-year schemes is 8.5% annually, and for the ten years NSC (IX) scheme it is 8.8%.
Tax benefits are available for investors. Although the age of entry to this scheme is 18, minors can open an account along with a guardian. However, the only downside to this scheme is that premature withdrawal is not possible.
This scheme is open to all senior citizens. It is offered by both banks and by the postal department. We rank it second because of its high returns, tax benefits, and flexibility. SCSS is one of the most preferred savings schemes for the elderly. Although the age of entry for this scheme is 60 years, individuals at 55 years of age who have retired on superannuation or VRS are also eligible.
The returns, at 9.3% per annum, making it one of the most attractive, competitive and safest investment schemes in the market. The scheme allows only a single deposit in the account in multiples of Rs. 1,000.
The maximum limit of investment is Rs. 15 Lakhs. The maturity period of the scheme is 5 years. It loses out on top honors in these rankings only due to its age restrictions and lack of loan facility.
Additional Reading: How Senior Citizens Can Save & Invest Better With Mutual funds
Recurring deposits are one of the simplest savings options offering guaranteed returns. You can start a bank RD with just Rs. 500 and a Post Office RD can be started with just Rs. 10. So, if you are one of those people unable to invest lump sum money, but have monthly surpluses to be invested, recurring deposits are just tailor-made for your needs.
RD schemes are available with both post offices and banks. The interest earned on bank recurring deposits varies according to the bank you choose and is subject to market fluctuations. However, post office RDs stand at a fixed rate of 8.4%.
The interest earned from an RD has now been brought under the TDS net and the investments are not eligible for tax deduction. This is the only reason RDs appear lower down the rankings. But the scheme has an advantage of the withdrawal of funds without any discounting (up to 50% after 1 year), which is just like an interest-free loan.
Additional Reading: Recurring Deposit: A Big YES Or A Giant NO?
This is yet another popular financial instrument with assured returns. However, the minimum investment under this scheme is Rs. 1,500/- and the deposits can be made in any multiples thereof. The maximum investment under a MIS is limited to Rs. 4.5 Lakhs in a single account and Rs. 9 Lakhs in a joint account. An investor can open as many accounts as he or she wishes.
The maturity period for the scheme is 5 years. But the money can be prematurely encashed after one year. If you are withdrawing it before 3 years, there will be a discount of 2% of the deposit. And if it is after 3 years, the discount is just 1% of the deposit.
The interest rate is 8.4% per annum and the investments bring tax rebates. It receives a lower ranking mainly due to its higher minimum investment and lack of loan facility.
Kisan Vikas Patra offers an annual return of 8.67% and doubles the invested amount in 100 months (in eight years and four months). The certificates are sold through post offices and are available in the denominations of Rs 1,000, 5,000, 10,000 and 50,000.
This scheme is safe and the returns and competitive. However, the downside is that it has a lock in period of 30 months, which means that the investors would not be able to withdraw the invested money before this period. Although it comes with tax benefits, loan facility is not available on this investment. This, coupled with its long tenure, pull it down the rankings.
There are no good or bad investment options. To each his own. Towards that end, there is a small savings scheme for each type of investor. After all, saving money and watching it grow is one addiction you want to keep feeding.
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