How can you choose the best saving scheme for your needs? This involves some homework and comparative analysis on your part. Here are some tips that you can follow.
What Is the Best Saving Scheme for You?
The best saving scheme for you will ideally be the following:
● Helps you amass a sufficient corpus to meet future goals like retirement and the higher education of your children, aligned with your specific financial goals.
● It should offer good returns while balancing market risks and stability as per your risk tolerance and preferences.
● There should be good tax benefits, including deductions on your investment payments and exemptions on maturity amounts, wherever possible.
● The lock-in periods should be manageable, while there should be provisions for partial withdrawals in case of emergencies.
Comparing the Best Savings Schemes in India
Here are some options worth considering:
Tax-saver FDs – These investments will give you deductions under Section 80C (up to Rs. 1,50,000), although there is a lock-in period of 5 years. The returns are stable and guaranteed, though they may be lower than many other plans. Note that the returns may be taxable based on your tax bracket upon maturity.
ULIPs – They are some of the best savings schemes in the country today, offering tax deductions up to Rs. 1.5 lakh on the premium payments that you make. At the same time, you will get life coverage for the policy term along with options to choose the funds that the plan will invest in (as per your risk appetite). You can also switch funds periodically to lower your risks as per market movements. There is a 5-year lock-in period, and you will have to pay an exit fee to withdraw during this period. There are several charges like fund management and premium allocation costs that you need to factor into your calculations. Yet, the potential returns can be comparatively higher than many other instruments, but they are subject to market risks.
ELSS (Equity Linked Savings Scheme) – ELSS enables you to invest in equities or equity-linked options for higher returns. Typically, at least 65% of the investment will be in equities, while there are tax deductions under Section 80C as well. You can choose between SIP or lump sum contributions as per your preferences, while the lock-in period stands at 3 years. Capital gains tax is payable at 10% at maturity on long-term capital gains exceeding Rs. 1 lakh in a financial year, although you don’t have to pay it if the income is lower than this threshold.
NSC (National Savings Certificate) – National Savings Certificate investments come with negligible risks and government backing. You can get Section 80C tax deductions, with investment amounts starting from Rs. 1,000 onwards. There is a 5-year maturity period while the interest rate changes every quarter but is fixed for the duration of your investment once made. The compounding of returns happens annually.
You will also find many other options, including the post office monthly income scheme (fixed interest rates and a 5-year maturity period without a lock-in). PPF (Public Provident Fund) is another option with a 15-year lock-in period, guaranteed returns, tax benefits, and loan facilities between 3-6 years from the opening date. Partial withdrawals are also allowed after the 6th financial year in specific circumstances. Compare all these options and then build your portfolio by balancing high and low-risk investment options for future savings.
Disclaimer:
CBD:
Qrius does not provide medical advice.
The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) outlaws the recreational use of cannabis products in India. CBD oil, manufactured under a license issued by the Drugs and Cosmetics Act, 1940, can be legally used in India for medicinal purposes only with a prescription, subject to specific conditions. Kindly refer to the legalities here.
The information on this website is for informational purposes only and is not a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or another qualified health provider with any questions regarding a medical condition or treatment. Never disregard professional medical advice or delay seeking it because of something you have read on this website.
Gambling:
As per the Public Gambling Act of 1867, all Indian states, except Goa, Daman, and Sikkim, prohibit gambling. Land-based casinos are legalized in Goa and Daman under the Goa, Daman and Diu Public Gambling Act 1976. In Sikkim, land-based casinos, online gambling, and e-gaming (games of chance) are legalized under the Sikkim Online Gaming (Regulation) Rules 2009. Only some Indian states have legalized online/regular lotteries, subject to state laws. Refer to the legalities here. Horse racing and betting on horse racing, including online betting, is permitted only in licensed premises in select states. Refer to the 1996 Supreme Court judgment for more information.
This article does not endorse or express the views of Qrius and/or its staff.
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