While there are several best investment plans, small saving schemes would still attract several investors. While these are safe investment options, these provide high interest rates and competing with bank fixed deposits. In this artice, I would provide quick snapshot about Top 5 Small Saving Schemes which you would love to invest. One should note that, not all schemes are suitable to every one. One should choose based on their individual need.
Top 5 Small Saving Schemes in India which you would love to invest
1) Sukanya Samriddhi Account offering 9.2% interest
- Sukanya Samriddhi Account Scheme is one of the best girl child saving scheme in India. This scheme helps to accumulate money for girl marriage or for her education. Here are some of its key features.
- Sukanya Samriddhi Account can be opened by any individual or guardian on behalf of a girl child.
- This scheme offers 9.2% interest rate for 2015-2016 financial year which would be reviewed every year by Govt. of India.
- Minimum deposit is Rs 1,000 and max is Rs 1.5 Lakhs per financial year.
- Deposit should be done till the girl attains 14 years of age.
- Interest would be credited once girl attains 14 years of age to 21 years of age.
- It can be opened for any girl child who is less than 10 years old.
- Account would be active till girl attains 21 years of age
- Amount deposited is exempted u/s 80C of income tax act upto Rs 1.5 Lakhs.
- Interest earned is tax free.
- You can open SSA in any post office or any authorized banks. You can check the authorized list of banks where you can open Sukanya Samriddhi Scheme.
- Partial withdrawal upto 50% can be done once girl attains 18 years of age for her education purpose.
- Account would be active till 21 years of age where maturity amount would paid.
Also Read: Complete review about Sukanya Samriddhi Account Yojana Scheme
2) Public Provident Fund offering 8.7% interest rates
- PPF is one of the best way to do child education or can do retirement planning scheme. You can open PPF Account with any post office or with ICICI Bank (which is the only private bank authorised to open PPF Account). Here are some of its key features.
- PPF Scheme interest rate for 2015-2016 is 8.7% per annum. It is compounded yearly, but paid at maturity. Interest rate would be reviewed by Govt. of India every year.
- Tenure of PPF account is 15 years of age. This can be extended for another 5 years block-period.
- Minimum deposit is Rs 500 and maximum is Rs 1.5 Lakhs per financial year.
- You can get tax benefit u/s 80C upto Rs 1.5 Lakhs
- Interest from PPF account is tax free on maturity.
- NRI’s who opened their PPF account before they moved out of India can continue their PPF account based on certain conditions.
- Individual can open PPF account along with their spouse and deposit Rs 1.5 Lakhs per annum each totaling to Rs 3 Lakhs for 15 years and get tax free maturity amount of Rs 94 Lakhs.
- Premature Withdrawal is not possible.
- Partial withdrawal available from 7th year from opening PPF account.
- Bonus Tip: You can deposit Rs 1.5 Lakhs by 4th April and enjoy highest tax free interest along with income tax benefit u/s 80C.
Also Read: How to get maximum interest on Public Provident Funde (PPF)?
3) National Saving Certificate (5 years and 10 years) – 8.5% and 8.8% interest rates
One of the oldest way of tax saving option is investing in National Saving Certificate (NSC) from post office. Here are some of its key features.
- NSC’s are available for 5 years and 10 years tenure.
- NSC for 5 years carry 8.5% interest rate per annum.
- NSC for 10 years carry 8.8% interest rate per annum.
- Minimum deposit is Rs 100 and max no limit.
- You can get tax benefit u/s 80C upto Rs 1.5 Lakhs
- You can invest Rs 100 in 5 years NSC and get maturity amount of Rs 151.62.
- You can invest Rs 100 in 10 years NSC and get maturity amount of Rs 236.60.
- You can buy NSC and gift it to your loved ones.
- These can be transferred from one post office to another post office.
- NSC Interest is taxable
- Bonus tip: Interest from NSC is taxable. However you can show this interest as re-invested and claim as part of 80C deduction (if 80C is not fully exhausted) as income from NSC as indicated in our guide to NSC article. This way you can avoid income tax on interest of NSC.
4) Post Office MIS Scheme (POMIS) – 8.4% interest rate
One of the best way to get monthly safest income is to invest in Post office Montly Income Scheme (POMIS). Here are some of its key features.
- Interest rate in POMIS scheme is 8.4% per annum.
- Interest is paid every month proportionately.
- Maturity of POMIS scheme is 5 years.
- Premature withdrawal possible, however 2% of deposit is deducted if you withdraw after 1 year, but before 3 years. 1% of deposit would be deducted after 3 years, but before maturity.
- You can transfer POMIS scheme from one post office to another post office easily.
5) Kisan Vikas Patra (KVP) – Double your money in 100 months
KVP is small saving scheme offered by post office where you can double your money in specific period.
- You can invest in KVP and double your money in 100 months / 8 Yrs 4 months.
- Interest rate works out to be 8.7% per annum (approx).
- You can invest in the denomination of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000.
- You can transfer KVP from one person to another person.
- Premature withdrawal available after 2.5 years from the date of issue.
- Comparison of features between KVP Vs NSC Vs PPF can give you better idea to choose the right one suitable to you.
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Suresh
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Hi
Nice article on small savings scheme. I have one question on Sukanya samridhi a/c, you have told that need to make the payment till the girl child attains 14 years of age. Suppose if I open an a.c when the child is 9 years then I need to make payment till the child attains 14 years age or 14 payments I need to make. Pls clarify
You need to make payment from 9 yrs to 14 years i.e. 5 years
Highly useful information. Many people might know something about PPF and National savings certificate. But, I wonder how many know about Sukanya Samriddhi account for girl child !!! Certainly, I do not. Thanks a ton. Appreciate your effort.
Hi Suresh,
I have 3 questions which I hope you will answer for me:
1. Can NRI’s open the Sukanya Samridhi Account?
2. If an NRI open PPF account after gaining NRI status, what would be the consequences and what will happen to the money, even though they are not allowed to open the PPF account?
3. What is the best pension plan for the NRI’s? Some of my friend has sent me the details of SBI Retire Smart Pension plan, where they claim more than 200% returns. I really don’t understand what it mean. Can you please write back to me the best pension plan that will suit my requirement? Also, you may write it on your blog.
Thanks.
1) NRI’s cannot open sukanya samridhid account for their daughter 2) Please refer this article about PPF account and how NRI can continue PPF account https://myinvestmentideas.com/2015/09/should-nris-continue-their-existing-ppf-account-in-india/ 3) Forget about these pension plans. Open MF account and start investing in them. If you are low risk taker, open NRE FD where interest is tax free
Thanks Suresh for your valuable information.
Regarding PPF’s, I have opened the PPF account after gaining NRI status. Can I continue this Account? Is there any problem in this situation?
Banks would cancel if you have opened after gaining this status. Check with the Bank Bhushan
My current portfolio is as under
Due for renewal (SIP INR 5000/month)
1. HDFC Prudence Fund Growth Oct 12 till Sep 15 CV- INR 225K
2. ICICI Pru Focused Bluchip Eq Fund Oct 12 till Sep 15 CV-INR 220K
Regular Plan – Growth
3. IDFC Premier Eq Fund-Reg Pln-G Oct 12 till Sep 15 CV-INR 250K
4. SBI Emerging Business Fund Sep 11 till Sep 15 CV-INR 350K
Regular Plan – Growth
5. UTI Opportunity Fund-G Oct 12 till Sep 15 CV-INR 200K
Old Investment (No new investment)
1. Franklin India Prima Fund Growth Sep 10 till Aug 11 CV – INR 140K
2. HDFC Equity Fund – Growth Sep 10 till Aug 12 CV – INR 200K
3. HDFC Top 200 – Growth Sep 10 till Aug 12 CV – INR 200K
4. ICICI Pru Value Discovery Fund Sep 10 till Aug 12 CV – INR 280K
Regular Plan – Growth
5. Franklin India Taxshiled-G Oct 12 till Mar 15 CV-INR 150K
6. ICICI Pru Tax Plan-Reg Plan-G Oct 12 till Mar 15 CV-INR 150K
Please advise the following;
1. Which SIP to start for next 12 months from the above or new – Total investment planned 50k/ month
2. Which of the above need to exit through sell
Please note that I do not have any immediate fund needs. The investment horizon is for long term say 5 years plus.
You are investing in good funds except like few which are not consistent performers. You may like to review HDFC Equity fund, IDFC Premier equity fund and exit if required. Others you can continue
Hi Suresh,
Good Article. Your webiste is not allowed to copy the content or atleast print article.
It should atleast allow us to print the articles so that we can refer some imp articles offline later and work on them.
Regards,
Shravan
Shravan, You can use “Ctrl+P” option to print any webpage.