As a retail investor, when you zero in on an investment option, you are likely to have a key goal of wealth creation and of ensuring the safety of funds in the long run.
One of the most common investing options for common investors are fixed deposits (FDs). Besides FDs, however, investors tend to invest in small savings schemes or post office savings schemes primarily because of the safety and fixed returns they offer.
These schemes not only deliver returns in the range of 4 to 8.2 per cent per annum but also enable investors to claim income tax exemption up to ₹1.5 lakh under section 80C of Income Tax Act.
These are some of the small savings schemes investors can go for.
Post office savings schemes
1. Post office savings account: The minimum balance to open a post office savings account is ₹500 while the minimum withdrawal amount is ₹50. There is no maximum limit of deposit.
2. Time deposit (1, 2, 3, 5 year): The minimum balance in a post office deposit account is ₹1,000 and in multiples of ₹100. There is no maximum limit for investment. The investment under 5-year term deposit qualified for the benefit of section 80C of Income Tax Act.
3. Five-year recurring deposit scheme: The minimum balance in recurring deposit scheme is ₹100 per month while there is no maximum limit.
The subsequent deposits will be made on the 15th day of month (if account opened up to 15th of the month) or on the last working day of a calendar month (if opened after 15th).
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4. Senior citizen savings scheme: The minimum deposit in this scheme is ₹1,000 up to the limit of ₹30 lakh. Investment qualifies for the benefit of section 80C of the Income Tax Act.
5. Monthly income account: The minimum monthly investment in a monthly income account is ₹1,000 whereas the maximum investment limit is ₹9 lakh in single account and ₹15 lakh in joint account.
6. National Savings Certificate (VIII issue): The minimum investment limit in NSC is ₹1,000 and in multiples of ₹100 while there is no maximum limit.
| Small savings schemes | Interest rate |
| Post office savings account | 4% |
| Time deposit | 6.9% (1 year), 7 (2 years), 7.1 (3 years), 7.5 (5 years) |
| 5-year recurring deposit scheme | 6.7% |
| Senior citizen savings scheme | 8.2% |
| Monthly income account | 7.4% |
| National Savings Certificate (VIII issue) | 7.7% |
| Public Provident Fund (PPF) | 7.1% |
| Kisan Vikas Patra (KVP) | 7.5% |
| Mahila Samman Savings Certificate | 7.5% |
| Sukanya Samriddhi Account Scheme | 8.2% |
(Source: Indiapost)
7. Public Provident Fund (PPF): The minimum amount to open a PPF account is ₹500 while the maximum amount is ₹1.5 lakh. Deposits can be made in lumpsum or in instalments.
8. Kisan Vikas Patra (KVP): The minimum amount to invest is ₹1,000 and in multiples of ₹100 while there is no maximum limit.
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9. Mahila Samman Savings Certificate: Minimum amount to invest in Mahila Samman Savings Certificate is ₹1,000 and in multiples of ₹100. The maximum limit is ₹2 lakh in an account or all accounts held by an account holder.
10. Sukanya Samriddhi Account Scheme: The minimum amount to invest in Sukanya Samriddhi Account is ₹250 and maximum amount is ₹1.5 lakh in a financial year. Deposits can be made in lumpsum. There is no limit on the number of deposits either in a month or in a financial year.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.
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Published: 03 Jun 2024, 10:09 AM IST
