5 government saving schemes to help you grow your finances
How do we build wealth safely but effectively? General FDs have a very low rate of interest and are hence not effective in the long run. Mutual funds and stocks on the other hand are risky investment options for those who are not well versed in the market. Here's a list of safe ways to build your wealth with government-certified schemes.
Sovereign Gold Bond (SGB)
Instead of buying physical gold, invest in sovereign gold bonds at your bank, issued by the Reserve Bank of India. This way you buy at the present market value and redeem it after the locking period at the future market value. You also reap annual interest from the amount invested. This method also cancels out the problem of losing or storing physical gold.
Public Provident Fund (PPF)
Public Provident Fund is a very efficient low-risk savings plan and a long-term investment option. With a higher rate of interest (7.1%) the amount deposited and interest earned is tax-free. A PPF account matures in 15 years but can be extended for a block of five years with more deposits. You can also retain the account without deposits at the prevailing rate of interest.
Senior Citizens Savings Schemes (SCSS)
Anyone above 60 years or anyone over 55 years who has retired is eligible for Senior Citizens Savings Schemes. The scheme, at a 7.4% rate of interest, has numerous security features. A single deposit in multiples of Rs. 1,000 to the maximum amount of Rs. 15 lakh is allowed. Help your parents avail of this scheme from their nearest post offices or certified bank.
Unit Linked Insurance Plan (ULIP)
This plan combines insurance and investment into one scheme. Part of the regular premium payments is for insurance coverage; the rest is invested in either bonds, equities, or both. A ULIP can be used for life insurance, wealth building, higher education for children, and retirement income. Proceeds are taxable if the annual premium exceeds Rs. 2.5 lakh at any time during the policy term.
Sukanya Samriddhi Yojna
Sukanya Samriddhi scheme offers a means of saving for a girl child. With a tenure of 21 years from the date of opening the account or till the girl gets married, parents can invest up to Rs. 1.5 lakh every year at a 7.60% rate of interest. You can avail of tax benefits of up to Rs. 1.5 lakh for contributions toward the scheme.
