Do Post office Savings schemes provide more interest rates than bank FDs ? How are these investments risk free? #moneymantrawithJhilmil #postofficeschemes #NSC #PPF #Sukanyasamriddhischeme #financialfreedom #financialawareness
Money Mantra

What are the benefits of Post Office Saving Schemes?

Benefits of Post Office Saving Schemes:

Due to the ongoing COVID-19 pandemic, its impacts on the Indian economy has been huge. Several nationalized banks have taken measures to cut the interest rates on Fixed deposits. And these FD rates can come down further, at any time. While we all have been reshuffling our portfolios, looking for better avenues for our investments, careful research, and the right comparison is of utmost importance. In the month of Feb, as COVID-19 was grappling the world, we invested a significant portion of our funds in Post Office saving schemes. That decision turned out to be very apt, looking at the scenario today. 

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What are Post Office Saving Schemes?

India Post, also known as Post Offices, provides various deposit instruments for investors. All these Post office saving schemes are backed by the Government of India, hence they pose a great investment option to park your funds safely.

Do Post office Savings schemes provide more interest rates than bank FDs ? How are these investments risk free? #moneymantrawithJhilmil #postofficeschemes #NSC #PPF #Sukanyasamriddhischeme #financialfreedom #financialawareness

What are the benefits of Post Office Saving Schemes?

1. Risk-Free( Minimal risk with Sovergin Guarantee ):

Since, all the post office schemes backed by the Government of India, hence they are considered to be the safest and risk-free investment avenues. It is one of the most interesting ways to park your hard-earned money with guaranteed returns. 

2. Long-term schemes (Schemes for all type of Investment goals ): 

Post-office schemes are perfectly suitable for investing your funds in the long term. There are varied Post office schemes which can run up to even 15 years, like PPF. With the help of such investment plans, you can accumulate a sizeable amount over a period of time. 

If you’re planning for retirement/marriage or long term goals for kids’ education, then you must keep investing a certain portion in Post office schemes and plans.

3. Better returns :

There is a direct comparison between the Bank FD and Post office schemes. Though the rates are fluctuating, as the FD rates are being cut, Post office schemes provide a better rate of returns. The Interest rates range from 4% (Savings) to 7.6% (Sukanya Samriddhi Yojana) currently. 

4. Tax Exemption:

Schemes offered by Post office are more tax efficient. While the interest earned on bank FDs is taxable, most of the returns from post office schemes are exempted from taxation. Schemes like PPF, SCSS, Sukanya Samriddhi Yojana, NSC, KVP, have tax benefits.

Related read: How to save Income Tax in India?

5. Benefits to Senior citizens(Regular income for Senior citizen):

The post office provides good returns on its Senior citizens’ savings scheme. Individuals who are 60years old, or 55 years in the case of VRS, can opt for this scheme, which comes with a 5-years lock-in period, with much better interest rates compared to FDs.

Though there are many benefits of Post office schemes over Bank schemes, banks are quite strong when it comes to technology and customer service. To invest in post office scheme, you need to either visit the nearest post office or take the help of their agents. Basic documentation is required to complete the enrolment for your chosen investment scheme. 

Here are Post office Savings schemes:

Savings schemeInterest rates (as on 1st July’2020)

Post Office Savings Account

4% p.a

National Savings Recurring Deposit account

5.8% p.a (quarterly compounded)

Savings Time Deposit account

6.7% for 5-years term deposit

National Savings Monthly Income Account

6.6% p.a (payable monthly)

Senior Citizens Savings Scheme Account

7.4% p.a

Public Provident Fund Account

7.1% p.a (maturity at the end of 15years)

National Savings Certificates (NSC)

6.8% compounded annually(payable at maturity)

Kisan Vikas Patra (KVP)

6.9% compounded annually

Sukanya Samriddhi Account

7.6% p.a(only for a girl child)

You can check out the detailed schemes on Indian post 

All these rates are compiled as of 1st July 2020. Though the rates have been decreased due to consistent pressure from banks, still these schemes provide a better rate at minimal risk.

I would definitely suggest you explore the Post office Savings scheme and diversify your portfolio.

Disclaimer: These are solely the opinions of the author. Though the information is well researched and true to the best of author’s knowledge, it cannot be a substitute for professional advice. This post does not guarantee or promises regarding the accuracy, reliability, or completeness of the information presented. The information presented is only for informational purposes and shouldn’t be seen as any kind of advice. Always refer to your Financial Advisor for financial advice.

Jhilmil

Quest to live the life surrounded with the charming little bundle's of joy. When they speak, I sing, When they smile, I rejoice , When they hug, I hold them never to lose, Such is my passion for these Gifts of God.

This love urged me to navigate separately from my Travel Blog & establish an "All-In-One" Blog for budding mothers. Mum's have multi-tasked this world ,with all her professional commitments , she still makes an extra effort to be a loving, caring and be an intellectual mommy! Cheers, for me too come from the same fraternity, post having a superb academics & close to 8 years of professional experience and blessed with a little one "who has indeed changed my life from Autumn to Spring";)

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