Which saving scheme you will select?

Investors are happy because  interest rate on small savings scheme have not been reduced.

Investors should not blindly invest in small saving schemes. Each scheme has specific features and one should assess which is best for your portfolio.

PUBLIC PROVIDENT FUND.

Interest rate:7.8%

Tenure:15 years (from first investment)

The PPF is option of people who doesn’t want to take risk and who are content with modest but assured returns..

It is tax free so it has advantage over fixed deposits. One best thing about PPF  is its longevity. PPF   account   has tenure of 15 years , but can be extended to blocks of five years indefinetly. After 15 years, the investor has three options

1.       With draw the corpus.

2.       Continue with the account without further contributions.

3.       Continue investing in the account.

If you choose to continue investing in it , you have to submit an application for extending the term for a block of five years.

PPF suits non-salaried people who are not eligible for retrial benefits. If you are a young and looking to save tax, you can prefer savings schemes such as ELSS funds over PPF.

SUKANYA SAMRIDDHI YOJANA.

Interest  rate:8.3%

Tenure:14 years.

People who have girl child under age of 10 years it is the best option over PPF. It offers higher interest rate than PPF. It is also has tax free interest and there is an annual cap of 1.5 lakh on the investment. This account can be opened in any post office or designated banks with a minimum investment of  rs.1000/-

According to some experts the debt based Sukanya scheme is not the best way to save for a long term goal. Equity-based operation can deliver higher returns than this scheme.

NATIONAL SAVINGS CERTIFICATES.

Interest rate: 7.8%

Tenure: 5 years.

There is no limit on investment in the NSC unlike PPF. But the interest rate is fully taxable. Though banks offer higher rates for senior citizens , for regular investors the   deposit rates are now 7-7.2%. This makes the NSCs more attractive.  But go for them only if you are ready to stand in long queues and put up with the carelessness of the government staff.

SENIOR CITIZENS’ SAVING SCHEME.

Interest rate:8.3%

Tenure:5 years.

You can start this account on  post office. This scheme  regular income to retirees. The term of the scheme is five years, which is extendable by another three years. There is a Rs 15 lakh over all investment  per individual. Only who are more than 60 years can open to this scheme. There is no age bar for defense personnel. They can invest in the scheme even before 60 as long as they satisfy other requirements.

                                -Muthu karthikeyan, Madurai