Investing in small savings schemes is a great way to start your investment journey in India. These schemes are backed by the government and offer guaranteed returns, making them a safe investment option for beginners. In this guide, we will discuss the various small savings schemes available in India and how you can invest in them.
What are Small Savings Schemes?
Small savings schemes are investment options offered by the government of India to encourage savings among individuals. These schemes are designed to provide a safe and secure investment option with guaranteed returns. The interest rates on these schemes are revised every quarter and are usually higher than the interest rates offered by banks.
Types of Small Savings Schemes
There are several small savings schemes available in India. Let's take a look at some of the popular ones:
1. Public Provident Fund (PPF)
PPF is a long-term investment option that offers tax benefits under Section 80C of the Income Tax Act. The scheme has a lock-in period of 15 years and offers an interest rate of 7.1% per annum (as of April-June 2020). The minimum investment amount is Rs. 500 and the maximum investment amount is Rs. 1.5 lakh per annum.
2. National Savings Certificate (NSC)
NSC is a fixed-income investment option that offers tax benefits under Section 80C of the Income Tax Act. The scheme has a lock-in period of 5 years and offers an interest rate of 6.8% per annum (as of April-June 2020). The minimum investment amount is Rs. 1,000 and there is no maximum investment limit.
3. Kisan Vikas Patra (KVP)
KVP is a fixed-income investment option that doubles your investment in 124 months (10 years and 4 months). The scheme offers an interest rate of 6.9% per annum (as of April-June 2020). The minimum investment amount is Rs. 1,000 and there is no maximum investment limit.
4. Sukanya Samriddhi Yojana (SSY)
SSY is a long-term investment option for the girl child. The scheme offers tax benefits under Section 80C of the Income Tax Act and has a lock-in period of 21 years or until the girl child gets married (whichever is earlier). The scheme offers an interest rate of 7.6% per annum (as of April-June 2020). The minimum investment amount is Rs. 250 and the maximum investment amount is Rs. 1.5 lakh per annum.
5. Senior Citizen Savings Scheme (SCSS)
SCSS is a long-term investment option for senior citizens (above 60 years of age). The scheme offers an interest rate of 7.4% per annum (as of April-June 2020) and has a lock-in period of 5 years. The minimum investment amount is Rs. 1,000 and the maximum investment amount is Rs. 15 lakh.
How to Invest in Small Savings Schemes?
Investing in small savings schemes is easy and can be done through any post office or authorized bank. Here's how you can invest in small savings schemes:
1. Visit the nearest post office or authorized bank
You can visit the nearest post office or authorized bank to open a small savings scheme account. You will need to fill out the application form and submit the required documents.
2. Submit the required documents
You will need to submit the following documents to open a small savings scheme account:
- Identity proof (Aadhaar card, PAN card, passport, etc.)
- Address proof (Aadhaar card, passport, utility bill, etc.)
- Passport size photograph
3. Make the investment
You can make the investment in cash, cheque, or demand draft. The minimum investment amount varies for each scheme.
Conclusion
Small savings schemes are a great way to start your investment journey in India. These schemes offer guaranteed returns and are backed by the government, making them a safe investment option for beginners. You can choose from a variety of schemes based on your investment goals and risk appetite. So, start investing in small savings schemes today and secure your financial future.
