Safest Investments India

The Safest Investment Schemes You Need to Know

PMC Bank scam and many such scams that sprung up every now and then have shaken the trust of the depositors in the financial system of the country. But the scenario is not that bad. There are various safe investment options available to investors.

One of the safest and trustworthy institutions of the country Post Office offers several investment schemes for the depositors and savers.

“Better a thousand times careful than once dead.” Proverb

This is Govt of India institute which means the money is safe. There is absolutely no risk unless the Govt of India goes bankrupt. While deposits with nationalized banks are also risk-free, post office deposits are the safest because post offices are a part of the Ministry of Finance, Government of India.

There are schemes for senior citizens, retirement planning, self-employed provident fund (PPF), tax saving schemes like National Saving Certificate, and also a scheme for the girl child. These schemes cover various investing needs of the citizen.

We have about 1.55 lakhs post office across India where any citizen can invest in these schemes.

Here is a brief about the Post Office Saving Schemes with salient features:

5-Year Post Office Recurring Deposit Account

​Salient features:

  • The account can be opened by cash / Cheque and in case of Cheque the date of deposit shall be the date of presentation of Cheque
  • Nomination facility is available at the time of opening and also after opening of account
  • The account can be transferred from one post office to another
  • Any number of accounts can be opened in any post office
  • The account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account
  • Joint account can be opened by two adults
  • The subsequent deposit can be made up to the 15th day of next month if an account is opened up to 15th of a calendar month and up to the last working day of next month if an account is opened between 16th day and last working day of a calendar month.
  • If a subsequent deposit is not made up to the prescribed day, a default fee is charged for each default, default fee @ 0.05 rs for every 5 rupees shall be charged. After 4 regular defaults, the account becomes discontinued and can be revived in two months but if the same is not revived within this period, no further deposit can be made.
  • If in any RD account, there is a monthly default amount, the depositor has to first pay the defaulted monthly deposit with default fee and then pay the current month deposit. This will be applicable to both Core Banking Solution (CBS) and non-CBS Post offices. (CBS: is the networking of bank/Post office branches, which allows customers to manage their accounts, and use various banking facilities from any part of the world.)
  • There is a rebate on advance deposit of at least 6 installments
  • A single account can be converted into Joint and Vice Versa
  • Minor after attaining majority has to apply for conversion of the account in his name
  • One withdrawal up to 50% of the balance allowed after one year. It may be repaid in one lump sum along with interest at the prescribed rate at any time during the currency of the account

Full maturity value allowed on R.D. Accounts restricted to that of INR. 50/- denomination in case of death of depositor subject to fulfillment of certain conditions.

Interest payable, Rates, Periodicity etc.  

From 01.07.2019, interest rates are as follows:-

  • 2​ % per annum (quarterly compounded)
  • On maturity INR 10/- account fetches INR 725.05 . Can be continued for another 5 years on year to year basis

​Minimum Amount for opening of an account and maximum balance that can be retained

Minimum INR 10/- per month or any amount in multiples of INR 5/-. No maximum limit.

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Time Deposit

Post Office Time Deposit Account 

​Salient features:

  • The account may be opened by an individual
  • The account can be opened by cash /Cheque and in case of Cheque the date of realization of Cheque in Govt. account shall be the date of opening of account
  • Nomination facility is available at the time of opening and also after opening of account
  • The account can be transferred from one post office to another
  • Any number of accounts can be opened in any post office
  • The account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account
  • A joint account can be opened by two adults.
  • A single account can be converted into Joint and Vice Versa
  • Minor after attaining majority has to apply for conversion of the account in his name

*In CBS Post offices, when any TD account is matured, the same TD account will be automatically renewed for the period for which the account was initially opened. Example 2 Years TD account will be automatically renewed for 2 Years. The interest rate applicable on the day of maturity will be applied

The investment under 5 Years TD qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Interest rates From 01.07.2019

1yr.A/c 6.9% |  2yr.A/c  6.9%  | 3yr.A/c 6.9​% | 5yr.A/c 7.7​ %

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Post Office Monthly Income Scheme Account 

​Salient features:

  • The account may be opened by an individual.
  • The account can be opened by cash/Cheque and in the case of Cheque, the date of realization of Cheque in Govt. account shall be the date of opening of an account.
  • Nomination facility is available at the time of opening and also after opening of an account.
  • The account can be transferred from one post office to another.
  • Any number of accounts can be opened in any post office subject to a maximum investment limit by adding balance in all accounts.
  • The account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account.
  • A joint account can be opened by two or three adults.
  • All joint account holders have an equal share in each joint account.
  • A single account can be converted into Joint and Vice Versa.
  • Minor after attaining the majority has to apply for conversion of the account in his name.
  • The maturity period is 5 years from 1.12.2011.
  • Interest can be drawn through auto credit into savings account standing at the same post office, through PDCs or ECS./In case of MIS accounts standing at CBS Post offices, monthly interest can be credited into savings account standing at any CBS Post offices.
  • It can be prematurely en-cashed after one year but before 3 years at a discount of 2% of the deposit and after 3 years at a discount of 1% of the deposit. (Discount means deduction from the deposit.)

A bonus of 5% on principal amount is admissible on maturity in respect of MIS accounts opened on or after 8.12.07 and up to 30.11.2011. No bonus is payable on the deposits made on or after 1.12.2011.

Interest payable, Rates, Periodicity etc. 

From 01.07.2019, interest rates are as follows:-

  • 6​ % per annum payable monthly.

Minimum Amount for opening of an account and maximum balance that can be retained

  • In multiples of INR 100/-
  • Maximum investment limit is INR 4.5 lakh in a single account and INR 9 lakh in the joint account
  • An individual can invest maximum INR 4.5 lakh in MIS (including his share in joint accounts)
  • For calculation of the share of an individual in a joint account, each joint holder has an equal share in each joint account.

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Senior Citizen Scheme

Senior Citizen Savings Scheme 

Salient features:

  • An individual of the Age of 60 years or more may open the account.
  • An individual of the age of 55 years or more but less than 60 years who have retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and the amount should not exceed the amount of retirement benefits.
  • The maturity period is 5 years.
  • A depositor may operate more than one account in an individual capacity or jointly with spouse (husband/wife).
  • The account can be opened by cash for the amount below INR 1 lakh and for INR 1 Lakh and above by Cheque only.
  • In the case of Cheque, the date of realization of Cheque in Govt. account shall be the date of opening of an account.
  • Nomination facility is available at the time of opening and also after opening of an account.
  • The account can be transferred from one post office to another
  • Any number of accounts can be opened in any post office subject to a maximum investment limit by adding balance in all accounts.
  • A joint account can be opened with spouse only and the first depositor in the Joint account is the investor.
  • Interest can be drawn through auto credit into savings account standing at the same post office, through PDCs or Money Order.
  • In the case of SCSS accounts, quarterly interest shall be payable on 1st working day of April, July, October, and January. It will be applicable at all CBS Post Offices.
  • Premature closure is allowed after one year on deduction of an amount equal to1.5% of the deposit & after 2 years 1% of the deposit.
  • After maturity, the account can be extended for a further three years within one year of the maturity by giving an application in the prescribed format. In such cases, the account can be closed at any time after the expiry of one year of extension without any deduction.
  • TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a.

Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007.

Interest payable, Rates, Periodicity etc.

From 01.07.2019, interest rates are as follows:-

  • 6 ​% per annum, payable from the date of deposit of 31st March/30th Sept/31st December in the first instance & thereafter, interest shall be payable on 31st March, 30th June, 30th Sept and 31st December.

Minimum Amount for opening of an account and maximum balance that can be retained

There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 15 lakh.

“Money is always eager and ready to work for anyone who is ready to employ it.” Idowu Koyenikan

15 Year Maturity Tax Saving Account – Public Provident Fund 

Salient features:

  • An individual can open an account with INR 100/- but has to deposit a minimum of INR 500/- in a financial year and maximum INR 1,50,000/-
  • A joint account cannot be opened.
  • The account can be opened by cash / Cheque and In the case of Cheque, the date of realization of Cheque in Govt. account shall be the date of opening of an account.
  • Nomination facility is available at the time of opening and also after opening of an account. The account can be transferred from one post office to another.
  • The subscriber can open another account in the name of minors but subject to maximum investment limit by adding balance in all accounts.
  • The maturity period is 15 years but the same can be extended within one year of maturity for a further 5 years and so on.
  • Maturity value can be retained without extension and without further deposits also.
  • Premature closure is not allowed before 15 years.
  • Deposits qualify for deduction from income under Sec. 80C of IT Act.
  • Interest is completely tax-free.
  • Withdrawal is permissible every year from the 7th financial year from the year of opening account.
  • Loan facility available from 3rd financial year.
  • No attachment under court decree order.

The PPF account can be opened in a Post Office which is Double handed and above.

Interest payable, Rates, Periodicity etc.

From 01.07.2019, interest rates are as follows:-

  • 7.9​ % per annum (compounded yearly).

​Minimum Amount for opening of an account and maximum balance that can be retained

Minimum INR. 500/- Maximum INR. 1,50,000/- in a financial year. Deposits can be made in lump-sum or in 12 installments.

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National Savings Certificates ​

Salient features:

  • A single holder type certificate can be purchased by, an adult for himself or on behalf of a minor or by a minor.
  • Deposits qualify for tax rebate under Sec. 80C of IT Act.
  • The interest accruing annually but deemed to be reinvested under Section 80C of IT Act.

Interest payable, Rates, Periodicity etc.

From 01.07.2019, interest rates are as follows:-

  • 9​ % compounded annually but payable at maturity.
  • INR 100/- grows to INR 146.25​​ ​after 5 years

Minimum Amount for opening of an account and maximum balance that can be retained

Minimum of Rs. 100/- and in multiples of Rs. 100/- No Maximum Limit

Kisan Vikas Patra Account

Salient features:

  • Certificate can be purchased by an adult for himself or on behalf of a minor or by two adults.
  • KVP can be purchased from any Departmental Post office.
  • The facility of nomination is available.
  • Certificate can be transferred from one person to another and from one post office to another.
  • Certificate can be encashed after 2 & 1/2 years from the date of the issue.

Interest payable, Rates, Periodicity etc.

From 01.07​.2019, interest rates are as follows:-

  • 7.6 % compounded annually
  • Amount Invested doubles in 113 months (9 years & 5​​ months)

​Minimum Amount for opening of an account and maximum balance that can be retained

Minimum of Rs. 1000/- and in multiples of Rs. 1000​/- No Maximum Limit.

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Sukanya Samriddhi Account Scheme

Sukanya Samriddhi Girl Child Account

​Salient features:

  • A legal Guardian/Natural Guardian can open an account in the name of Girl Child.
  • A guardian can open only one account in the name of one girl child and a maximum of two accounts in the name of two different Girl children.
  • The account can be opened up to the age of 10 years only from the date of birth. For initial operations of Scheme, one year grace has been given. With the grace, Girl child who is born between 2.12.2003 &1.12.2004 can open account up to1.12.2015.
  • If minimum Rs 1000/- is not deposited in a financial year, an account will become discontinued and can be revived with a penalty of Rs 50/- per year with a minimum amount required for deposit for that year.
  • Partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder’s attaining age of 18 years.
  • The account can be closed after the completion of 21 years.
  • Normal Premature closure will be allowed after completion of 18 years /provided that the girl is married.

Interest payable, Rates, Periodicity etc.

Rate of interest 8.4​% Per Annum(with effect from 01-07​-2019 ), calculated on a yearly basis,  Yearly compounded.

Minimum Amount for opening of an account and maximum balance that can be retained

Minimum INR. 25​0/-and Maximum INR. 1,50,000/- in a financial year. Subsequent deposit in multiples of INR 100/- Deposits can be made in lump-sum No limit on the number of deposits either in a month or in a Financial year.

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Post Office Savings Account

Salient features:

  • The account can be opened by cash only
  • Minimum balance to be maintained in a non-Cheque facility account is INR 50/-
  • Cheque facility available if an account is opened with INR 500/- and for this purpose minimum balance of INR 500/-in an account is to be maintained
  • Cheque facility can be taken in an existing account also
  • Interest earned is Tax-Free up to INR 10,000/- per year from the financial year 2012-13
  • Nomination facility is available at the time of opening and also after opening of account
  • The account can be transferred from one post office to another
  • One account can be opened in one post office
  • The account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account
  • Joint account can be opened by two or three adults
  • At least one transaction of deposit or withdrawal in three financial years is necessary to keep the account active
  • A single account can be converted into Joint and Vice Versa
  • Minor after attaining majority has to apply for conversion of the account in his name
  • Deposits and withdrawals can be done through any electronic mode in CBS Post offices.
  • ATM facility is available

Interest payable, Rates, Periodicity, etc.

4.0% per annum on individual/joint accounts

Minimum Amount for opening of an account and maximum balance that can be retained

Minimum INR 20/- for opening

“It is what a person will do with the saved money that will make a big difference in his or her finances”  H. J. Chammas

The only issue with the post office is poor customer experience. If the Govt of India focuses on customer experience in the post offices, these 1.55 lakhs outlets, which sell the safest saving and investment schemes,  can offer all banks run for its money.

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