We all want to grow our wealth to look after the wellbeing of ourselves and our family. In this day and age, it is very important to save funds for emergencies or to secure finances for retirement. One smart way to increase your wealth and to cater to the day to day financial requirement is to put the money in the right instrument.Read more
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There are some savings schemes offered by the government, financial companies, and banks to encourage investors to invest more and earn high returns. It goes without saying that before investing, you need to look at both the pros and cons of your investment options and plan accordingly. If you are planning on investing in a savings plan, here are the top 10 savings plans for 2023 that can help you to save for your future financial needs.
The following are the 10 best savings plans to invest in 2023.
National Savings Certificate
Senior Citizen Savings Scheme
Post Office Monthly Income Scheme (MIS)
Public Provident Fund (PPF)
KVP (Kisan Vikas Patra)
Sukanya Samriddhi Yojana (SSY)
Atal Pension Yojana
Employee Provident Fund (EPF)
Pradhan Mantri Jan Dhan Yojana
|Savings Plans||Current Interest Rate|
|National Savings Certificate||7.9%|
|Senior Citizen Savings Scheme||8.5%|
|Post Office Monthly Income Scheme (MIS)||6.6%|
|Public Provident Fund (PPF)||7.1%|
|KVP (Kisan Vikas Patra)||7.6%|
|Sukanya Samriddhi Yojana (SSY)||7.6%|
|Atal Pension Yojana||N/A|
|Employee Provident Fund (EPF)||8.6%|
|Pradhan Mantri Jan Dhan Yojana||2% above base rate not exceeding 12%|
Invest For (in Years)
Stay invested for (in Years)
Expected rate of return (in %)
The National Savings Certificate (NSC) is a fixed income saving plan that one can open with any post office in India. This savings plan is an initiative of the Government of India and encourages investors, mainly those who fall under small or mid-income categories, to invest while saving on income tax. Being a fixed return and low-risk investment, National Savings Certificate is primarily used by people for small to medium investments and also for tax-saving purposes.
This savings plan can be bought from your local post office. The minimum age for an investor is 18. You can also buy an NSC for a minor along with an adult, as a joint account. NSCs are available with two fixed maturity years: 5 and ten years. Also, there is no limit on the maximum number of NSCs that one can purchase. However, investments up to one lakh fifty thousand rupees annually in this savings plan can earn a tax break, according to Section 80C of the Income Tax Act.
Coming down to how this savings plan works; firstly, you need to buy a national savings certificate worth a specific amount of your choice. This will be considered as your investment. After the investment is made, according to rates associated with the type of certificate bought, an interest rate is earned. As mentioned earlier, the maturity for these certificates is set to five or ten years from the date of purchase. The interest, on the other hand, is calculated on a yearly basis.
The current annual interest rate for five-year schemes is 7.9%, while for a ten-year scheme it is 8.8%. However, the interest will not be paid to the owner until the certificate matures. It is also important to note that the government revises these interest rates every quarter. The interest generated will be reinvested by default.
Anyone can invest in an NSC savings plan, except Hindu Undivided Families (HUFs), trusts and non-resident Indians. This savings plan offers one of the highest return rates among other fixed-rate instruments. Also, the minimum investment is low as Rs. 100!
The investor can nominate a family member for the savings plan, even if they are a minor, who will be inheriting the NSC, in case of the investor’s demise. The savings plan used to have two types of certificates originally: the NSC VIII Issue and the NSC IX issue. However, the NSC IX issue was discontinued in 2015 and currently only the NSC VIII Issue can be subscribed to.
For obtaining the certificate, you will have to submit certain documents at the post office, and also complete the KYC process. One can easily transfer the certificate from one post office to another. Upon maturity, you will receive the entire amount of the maturity value. As there is no TDS on NSC payouts, the investor will have to pay the tax applicable to it. The only drawback of this scheme is that premature withdrawal is not possible.
The senior citizen savings plan offers its investor very high safety, regular income, and is an excellent tax saving investment plan. At the time of retirement, individuals are hesitant to invest their money in equities since they prove to be risky. On the other hand, there are schemes with an extended maturity period which don’t offer income regularly. For all those retirees looking for less risky products and focusing on minimizing tax, the senior citizen savings scheme is an ideal option. This scheme is available through post offices and certified banks across India.
The eligibility for investors for this savings plan is individuals who are at least sixty years old. Individuals between 55 to 60 years of age, who have chosen the Voluntary Retirement Scheme or Superannuation, can also invest. However, the investment should be made within a month after receiving the benefits of retirement. Retired Defence Personnel aged 50 or above, are also allowed to invest. However, HUFs and NRIs cannot buy this savings plan.
The maximum amount a person can invest in this savings plan is Rs 15 lakh, either through a single or joint account. Another factor to take note of is that the amount that will be invested in the scheme should not be more than the money which is received at retirement. There is no limit on the maximum number of accounts that can be opened. However, the total amount across all the accounts cannot exceed the maximum limit mentioned. This savings plan account can be started either through cash or through cheque. For an amount below 1 lakh, it is going to be by cash, and for anything above that, it will be through cheque. You will also need documents for identity proof, age proof, and address proof. Two passport size photographs are required, and a form has to be filled for opening an account.
The average tenure of this savings plan is five years but can be extended for three more years. In SCSS, tax deduction up to Rs. 1,50,000 can be claimed as per Section 80C of the Indian Income Tax Act. Although the maturity is five years, premature withdrawals are allowed, with a penalty. Withdrawals before maturity can be made only after a year of opening the account.
If the account is closed after a year, but before the term of two years, 1.5% of the amount deposited will be subject to deductions as charges for pre-mature withdrawal. If the account is closed after two years, 1% of the invested amount will be subject to deductions as charges for pre-mature withdrawal. As mentioned earlier, investors can extend their tenure to three more years. Only one extension will be allowed. These extended accounts can be closed after a year of extension, without any penalty. No penalty will be charged for the premature closure of an account in case of the demise of the investor.
The SCSS savings plan is safe and reliable since it is a scheme sponsored by the Indian Government. The nomination facility is also available and can be made by submitting an application form at the time of opening the account.
A recurring deposit or an RD is a term deposit offered by banks. This savings plan is meant for those who can regularly deposit money and want a huge return at the time of maturity. Individuals can choose the term period and also the amount and number of monthly deposits they want to make, according to their convenience.
The minimum amount to start a bank RD is Rs 500 while the minimum amount for a post office RD is only Rs 10. The interest that is earned on bank RDs differs according to the bank that you choose and is sensitive to market fluctuations. Post office recurring deposits, on the other hand, have a fixed rate of interest of 8.4%. The tenure of a recurring deposit varies from 7 days to 10 years. This is what makes this savings plan a great choice for individuals with monthly income, who can deposit a fixed amount every month.
Recurring Deposit savings plan encourages a saving habit among the people. Mid-term and premature withdrawals are not allowed for RDs. The bank may sometimes allow early withdrawal with a penalty. Also, RDs allow higher rates of interest for senior citizens. Moreover, recurring deposits can also be used as collateral for taking loans.
Any individual is eligible to open an RD account. With name proof, minors above ten years can open an RD account. Minors below ten years of age can open an RD under the supervision of their parents or legal guardians. Any commercial or government organization is also allowed to open a recurring deposit account. The applicant needs documents for address proof and identity proof, and passport-sized photographs to open an account.
Unlike equities, this savings plan offers guaranteed returns on the principal amount invested. However, it has a comparatively lower rate of interest. Also, the monthly amount that you decide to invest cannot be changed.
Read Also: Post Office Interest Rate
This is a savings plan where you invest some amount for which an interest amount will be paid monthly. Being a low-risk monthly income scheme, this savings plan generates a steady income. The money invested is completely safe until it matures since the scheme is sponsored by the government. When the maturity period of the savings plan is reached, you can either withdraw the amount or invest in the scheme again.
You can start with an initial investment amount while opening the account and later multiply this, according to how much you can afford. The returns in this savings plan are high, in fact, more than other similar investment plans. However, the post office monthly income scheme will be subject to taxation. On the plus side, this option does not have tax deducted at source.
The savings plan is only available for Indian citizens. Any minor above ten years of age can open this account too. Multiple accounts can be opened for an individual but the amount together in all the accounts cannot be more than Rs. 4,50,000. For minors, the invested amount should not be more than Rupees three lakhs for this savings plan.
A beneficiary or a nominee can be nominated for this savings scheme. Although joint accounts can be opened, according to the savings plan, an equal share is given to all account holders, regardless of who is contributing. In case you’re shifting to a new city, the entire investment amount can be transferred to another post office without any extra costs.
This savings plan by the Indian Post Office doubles whatever money is invested in a period of 100 months, i.e., eight years and four months. The minimum investment for this savings plan is Rs. 1000. The savings plan, which was initially only meant for the farmers, encourages long-term savings among the people. Now, it is available to everyone.
To prevent money laundering, the government has made it compulsory to provide PAN Card proof for investments above Rs. 50,000. To invest more than Rs. 10,00,000, one has to provide income proofs. Submitting Aadhar for identity proof is also mandatory.
Any citizen of India, aged above 18, can buy a Kisan Vikas Patra certificate from the local post office. The savings plan is not subject to market fluctuations and offers guaranteed returns. The current annual return for KVP is 8.67% and varies every year.
Investors can redeem money before the maturity ends. However, there is a lock-in period of thirty months. After this, individuals can withdraw money at intervals of 6 months. KVP certificates can be used as collateral to avail loans. The savings plan is not subject to Section 80C of the Income Tax Act. Hence, the returns are taxable. However, TDS is exempt from withdrawals after the maturity period.
To conclude, there is no savings plan that is good or bad. There isn’t a single plan that is highly beneficial to others. In the end, you are multiplying your money, but only in different ways. Analyze your financial needs and goals and ensure that your savings plan meets your vision. Pick one that is ideal for you and support your goals without causing strain on your financial situation.
The National Savings Institute introduced by the Public Provident Fund in year1968. As a government-backed savings scheme, it is the safest and most popular savings option in India. The contribution made towards the PPF account is applicable for tax deduction under section 80C of Income Tax Act. The scheme attracts an annual income rate of 7.6%, which is compounded annually. One can make a minimum contribution of Rs.500 and can invest up to maximum Rs.1.5 lakhs in a financial year. The benefits offered by PPF are payable in form of lump-sum or up to 12 deposits per financial year. PPF provides flexibility as an individual can transfer the PPF account from one post-office or bank to another.
Sukanya Samriddhi Yojana is introduced by the Indian Ministry of Finance. This is a savings scheme, which is specifically designed to secure the financial future of the girl child. Some of the salient features and benefits offered by Sukanya Samriddhi Yojana are:
The Sukanya Samriddhi Yojana attracts the highest annual interest rate of 8.1% on the principal amount as compared to the other savings scheme.
One can open the SSY account at any post office or authorized bank in India.
An individual can start the account by making the minimum investment of Rs.1000 and can invest up to a maximum of Rs.1.5 lakhs in a financial year.
The maturity term of the scheme is 21 years from the date of issuance and the account holder can contribute to the account up to total tenure of 14 years.
The SSY account can be transferred from one post-office or bank to another within India.
As a government-initiated savings scheme, this plan is specifically designed for the welfare of the weaker section of the society. This scheme is applicable for any individuals who are working in the unorganized sectors and those who require financial support from the government-sponsored welfare program. Atal Pension Yojana serves as a lucrative pension plan for the post-retirement years of the individuals. The individuals need to pay a very low premium and enjoy the benefits of this scheme. Some of the salient features and benefits offered by the Atal Pension Yojana Scheme are:
This is a robust retirement plan which offers the benefit of regular income to the weaker section of the society and to those individuals who are working in the unorganized sector.
Individuals between the age group of 18 years- 40 years are eligible to apply for the same.
The premium rate of the scheme is very low and has to be paid for the minimum tenure of 20 years. However, higher the premium amount, higher pension coverage will be offered to the individuals.
It is mandatory for the applicant to hold an active savings bank account.
Introduced by the Employee Provident Fund Organization (EPFO), EPF is a government-initiated savings scheme, wherein it is mandatory for salaried individuals to make an equal financial contribution towards the Provident Fund (PF) account. EPF fund helps individuals to plan their retirement in advance so that they can spend their golden days of retirement in a stress freeway. Moreover, the EPF scheme also helps the individual to fulfill their financial objectives of life and help them to deal with any type of emergencies. Some of the salient features of the EPF Scheme are:
In this savings scheme, the employee and employers make an equal contribution of 12% of the employees’ monthly salary towards the PF account per month.
The annual interest rate on the contribution made towards the EPF scheme is 8%-12%.
The interest is credited to the account of the employees on 1st April of every financial year.
Launched by the government of Indian in the year 2014, this savings scheme is specifically designed for individuals who do not have a bank account in India. Pradhan Mantri Jan Dhan Yojana offers cost-effective solutions related to accessing the financial services such as remittance, banking, pension, insurance, etc. salient features and benefits offered by Pradhan mantra Jan Dhan Yojana are:
The account holders are eligible for life cover of INR30,000 and accidental insurance cover of Rs. 1 lakh in case of any eventuality.
Overdraft facility of up to Rs.5000 is offered to the account holder, which is applicable to not more than one account per person.
The applicant can avail seamless access to the pension and insurance policies.
The account holders can avail interest on their deposits.
The beneficiary of the scheme is eligible for direct benefit transfer.
Past 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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