Top 5 Savings Schemes To Build Wealth in 2024

The Indian government and public sector financial institutions have introduced several savings schemes that encourage people to save and invest wisely. Most of these schemes offer higher interest rates and tax exemptions. By investing in them, citizens can not only protect their wealth but also grow it over time.
 

Moreover, these savings schemes target a wide audience and are ideal for goals like retirement, children's education, or marriage. In this article, let’s check out the top 5 savings schemes you can consider to achieve your financial goals.
 

If you are looking for a safe investment option, you can consider fixed deposit. They offer guaranteed returns and a fixed interest rate throughout your investment tenure.

• Tax-saving fixed deposit is a popular savings scheme that provide guaranteed returns. They offer tax benefits under Section 80C and come with a 5-year lock-in period.
• ELSS are tax-saving mutual funds with the shortest lock-in period of 3 years. They carry the potential to earn high returns from stock investments.
• SSY is a government-backed savings scheme run especially for a girl child. It offers guaranteed returns (current interest rate is 8.2%) and tax deductions under Section 80C.

Tax Saving Fixed Deposits are low-risk saving schemes. They provide guaranteed returns that are calculated at a pre-determined interest rate. One of their most important feature is that they offer tax benefits under Section 80C of the Income Tax Act, up to Rs. 1.5 lakh.
 

These FDs come with a 5-year lock-in period, and the minimum investment required is Rs. 100, with no upper limit. The interest rates differ between banks and are currently around 6.5% to 7.25%. However, be aware that only the principal amount invested in these FDs are tax-deductible. Any interest earned is taxable, and you must include it in your total income. 

ULIP is a financial product that combines life insurance with investment. Part of the money you invest goes toward providing life insurance, while the rest is invested in equity or debt funds. Importantly, ULIPs offer tax benefits under Section 80C, and you can claim deductions up to Rs. 1.5 lakh.

The returns (interest) are tax-free but are not guaranteed. They are tied to market performance and fluctuate over time. Also, the minimum investment varies from policy to policy, and there is no maximum investment limit.

ELSS is a “tax-saving mutual fund” that primarily invests in equities (stocks). At least 80% of its assets are invested in equities. The rest is invested in debt instruments, which helps to earn balanced returns. Notably, this saving scheme has the shortest lock-in period among tax-saving schemes and requires a minimum hold of just 3 years. Also, the scheme offers a high potential for long-term returns due to the compounding effect of stock investments. The tax deductions are available under Section 80C for up to Rs. 1.5 lakh.
 

However, upon redemption, the arising long-term capital gains (LTCG) are taxed at 12.5% (up from the erstwhile limit of 10%) with an exemption limit of Rs. 1.25 lakh per financial year (up from the previous limit of Rs. 1,00,000). Additionally, the dividends you earn are taxable as per your applicable slab rates and should be included in your total income. 

ELSS is a “tax-saving mutual fund” that primarily invests in equities (stocks). At least 80% of its assets are invested in equities. The rest is invested in debt instruments, which helps to earn balanced returns. Notably, this saving scheme has the shortest lock-in period among tax-saving schemes and requires a minimum hold of just 3 years. Also, the scheme offers a high potential for long-term returns due to the compounding effect of stock investments. The tax deductions are available under Section 80C for up to Rs. 1.5 lakh.
 

However, upon redemption, the arising long-term capital gains (LTCG) are taxed at 12.5% (up from the erstwhile limit of 10%) with an exemption limit of Rs. 1.25 lakh per financial year (up from the previous limit of Rs. 1,00,000). Additionally, the dividends you earn are taxable as per your applicable slab rates and should be included in your total income. 

NPS is a retirement savings scheme. It provides a regular monthly income after retirement. While employed, individuals contribute to NPS, and this money accumulates over time. After retirement, the collected amount is converted into an annuity plan, which pays the investor a “monthly income”.
 

Now, if we talk about tax benefits, employees contributing to the NPS can claim deductions on their self contributions. They can get a deduction of up to 10% of their basic salary plus dearness allowance (DA) under Section 80CCD(1), within the overall limit of Rs. 1.5 lakh, as specified under Section 80CCE.
 

Additionally, they can claim an extra deduction of up to Rs. 50,000 under Section 80CCD(1B), beyond this Rs. 1.5 lakh limit.
 

For employer contributions, employees can claim a tax deduction on up to 10% of their salary (or 14% if the Central Government contributes) under Section 80CCD(2). As per Budget 2024, starting from April 2025, the employer's allowed contribution will increase to 14% of the salary.
 

You can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.75% p.a.