Risk Free Investments - Post Office Savings Schemes

 

Everyone's investment journey should start with some risk free investments so they can estimate the returns required to reach to their financial goals with certainty. Post office saving schemes are government assured schemes. When you cannot risk your capital like after retirement or at very early stage when income and liabilities are disproportionate, Post office saving schemes are a good option with moderate returns. Among the below mentioned alternatives, PPF and SCSS are commonly preferred.

Let us know about them..

1. Post Office Savings Account

The minimum deposit to open a Post Office Savings Account is Rs.500. The account can be opened in single or joint ownership by domestic customers. An interest rate of 4% p.a. Is applicable to the deposits. You can avail of a cheque book, ATM card, e-banking and mobile banking services, and other services with the account on request.

2. 5-Year Post Office Recurring Deposit Account (RD)

As the name suggests, the tenure of this RD account is fixed for five years. You can agree to a fixed monthly deposit payment starting from Rs.100 and earn interest at 5.8% p.a. The interest gets compounded quarterly. You can get a loan of up to 50% against the deposit you have already made in the account after completing 12 instalments without defaulting.

3. Post Office Time Deposit Account (TD)

There are four possible tenures for Post Office Time Deposit Accounts you can choose from, i.e. 1 year, 2 years, 3 years, and 5 years. The minimum deposit allowed in this account is Rs.1,000. The interest is calculated quarterly but is payable on an annual basis. For a tenure of up to 3 years, the rate is 5.5% p.a. and it is 6.7% p.a. for a 5-year tenure.

4.Post Office Monthly Income Scheme Account (MIS)

You can deposit a sum of Rs.1,000 up to Rs.4.5 lakh in a single account and up to Rs.9 lakh in a joint account. An interest rate of 6.6% can be earned through this account. You can get monthly fixed income from the scheme. You cannot prematurely close the account before completing one year. Premature closure beyond one year can attract penalties.

5.Senior Citizen Savings Scheme (SCSS)

This is a government-backed retirement scheme that allows you to make a deposit of a lump sum in one instalment. The deposit can range from Rs.1,000 up to Rs.15 lakh. The scheme offers an interest rate of 7.4% p.a. Individuals above the age of 60 years are eligible to open this account.

Retired civilian employees aged between 55 years and 60 years and retired defence employees aged between 50 years and 60 years of age can also open the account subject to investing the retirement benefits within one month from the date of receipt of the benefits.

6. 15-Year Public Provident Fund Account (PPF)

Many salaried individuals prefer PPF as an investment and retirement tool as the scheme offers income tax deductions up to Rs.1.5 lakh per financial year. The minimum deposit required to open the account is Rs.500 and the upper limit is Rs.1.5 lakh.

Though the tenure of the account is 15 years, you only have to pay Rs.500 per financial year to keep the account active. An interest rate of 7.1% p.a. is offered by the scheme. The interest is compounded yearly. Also, the interest earned on this account is tax-free.

7. National Savings Certificates (NSC)

NSC comes with a tenure of five years where you need to make a minimum deposit of Rs.1,000. There is no maximum deposit defined for this account. With an interest rate of 6.8% p.a., the interest gets compounded annually and is paid out only at maturity.

An individual can open any number of accounts under the scheme. The certificate can be pledged or transferred as security to the housing finance company, banks, government companies, and others.

8.Kisan Vikas Patra (KVP)

The attraction of this scheme is that over the tenure of the account, your investment will be doubled. The minimum deposit for this account is Rs.1,000. As per the rates applicable to quarter 4 of the fiscal year 2020-21, the applicable interest rate is 6.9% p.a. And the tenure of the account is 124 months (10 years and 4 months). Please note that the tenure of the account varies with the variation in the interest rate.

9. Sukanya Samriddhi Accounts (SSA)

This is a government scheme dedicated to the financial well-being of the girl child. Only girl children below the age of 10 years are eligible to get the benefits of this account. The account must be opened and operated by parents or guardians.

The minimum deposit required is Rs.250 and a max of Rs.1.5 lakh per financial year. An interest rate of 7.6% p.a. Is applicable. The interest is calculated on a yearly basis and compounded annually. The guardian can operate the account until the girl child attains 18 years of age. The deposit can be made for a maximum of 15 years from the date of opening the account.

Consult your Financial Advisor prior to investments.