Which Saving Schemes In India Should You Invest In?
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Which Saving Schemes In India Should You Invest In?

  • 2 min read

  • Highlights

  • Invest smartly to gain financial independence

  • Diversify your investment portfolio for lowering risk

  • Fixed deposits enable stable returns with flexibility

  • Choose frequency of FD interest pay-outs

The pressures to grow your wealth is prevalent across the world, as you may want to set aside funds for emergencies, secure finances for retirement, and manage your daily expenses.

Investments are a smarter way to grow your money, so you can cater to your everyday needs and secure your future easily. There are several savings schemes offered by the government, banks and financial companies, to encourage investors to invest and earn more returns.

However, before you start investing, make sure you delve deep into the pros and cons of your investment options and ace your financial planning endeavours.

If you’re planning to invest your money, here are the best investment schemes to help you save for your future financial needs.

- Mutual funds: You can invest in mutual funds if you want to explore and benefit from equities and debts, which gives you an option to balance risk and returns based on your preference. Investing in the share market through mutual funds is a safer option than making a direct investment in the stock market.

You can consider starting a systematic investment plan (SIP), which is one of the best ways to invest in mutual funds by making small regular investments.

This helps you earning better returns in comparison to other investment options.

- Fixed deposits (FD): FDs are the safest and most hassle-free investment option wherein you deposit a fixed sum of money for a specified period and earn interest at fixed rate of return. If you’re looking for higher interest rates, choose to invest in company FDs that offer high interest rates and greater flexibility in terms of tenor, and frequency of periodic interest payouts.

In case of emergencies, you can also consider breaking your FDs prematurely, or taking a Loan against Fixed Deposit. You can also consider re-investing the interest, to receive a lump sum amount after your FD matures. Investing in FDs can enable senior citizens to gain higher interest rates, so they can plan their retirement better.

Consider investing in Bajaj Finance Fixed Deposit, which offer one of the highest interest rates, along with the option to choose cumulative or non-cumulative fixed deposits. You can also choose the frequency of your interest payouts, which can be monthly, quarterly, half-yearly or yearly. Bajaj Finance Fixed Deposits are also ranked high in terms of safety by ICRA and CRISIL, so you can get assured returns.

- Personal Provident Fund (PPF): As the safest and most popular investment option in India, PPF is a government-backed long-term saving scheme that is tax-free. The amount of money deposited in PPF is available as deduction under section 80C of Income Tax Act; and the interest earned on PPF is also not taxable.

PPF may be opened in a bank or post office, where your money gets invested for 15 years, and can be extended by another 5 years. There is a lock-in period of 5 years and presently, the PPF investments earn a compound interest at 7.90% p.a. You need to make a minimum annual investment of Rs. 500 and can make a maximum investment of about Rs. 1,50,000.

5 reasons to Invest in SIP

- National Saving Certificate (NSC): NSC is popular government-backed saving option that provides guaranteed returns with tax savings. A safe investment, you can invest in NSC at any post office for a period of five years. The interest rates on NSC is decided by the government and is reviewed every quarter.

The interest rate however, does not change during the tenor of NSC once your investment has been made. Presently, your investment in NSC yields returns of 7.90%, which is compounded half yearly.

A minimum investment of Rs. 500 can be made in NSC, without any maximum limit. The best thing is that you can claim tax deductions, but to the maximum amount of Rs. 1,50,000 under section 80C. Keep in mind that the interest earned on NSC is taxable, so when filing your tax returns, you must add the interest accrued on NSC to your total income.

- Equity Linked Savings Scheme (ELSS): As the name suggests, this mutual fund scheme helps in parking your investment in equity. ELSS are tax-saving mutual funds that allow a deduction up to Rs. 1,50,000 under section 80C. It comes with a lock-in period of 3 years.

You can earn higher returns by investing in ELSS since all the investments are made in the equity market that can help you beat inflation, but there is always a risk attached to investing in equity. An investment in ELSS can be made from as low as Rs. 500 and there is no maximum limit on investment in these funds.

It is wise to choose a combination from these investment options and schemes, and spread your risk by investing in safe options like FDs and diversifying with options like mutual funds. You can also calculate your returns by using a fixed deposit calculator. Being prepared for your financial wellbeing and planning in advance is the right way to ensure that you and your family are prepared to deal with all kinds of financial contingencies.

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