A savings plan is much different from an investment plan as its duration is short. It should also allow the maximum possible liquidity to become useful whenever an unexpected need arises. But people often leave out investing in the best savings plan for their requirements due to sheer unawareness of its existence. If you have any trouble finding a profitable and safe savings plan, you must know all the profitable ones well in advance. Here, you will know about all such plans in their two major categories, long-term and short-term. You can choose any of these best savings plans suitable for you through this information.
Long Term Savings Plans
Public Provident Fund
PPFs are one of the most preferred savings plans for working employees. These plans are valid for the employment eligible ages in India between a minimum of 18 to 58. The current return rates of these plans are 7.10% per annum. You can invest up to INR 1.5 lakh per annum in PPF for 15 years.
National Pension Scheme
National pension schemes are for the benefit of all people who wish to obtain a pension when they reach the age of 60. The age limitations to joining the plan are between 18 to 60 years. And the interest rates vary between 9% and 12% per annum. The longer the duration between the age of investment commencement and the age of 60, the higher will be the interest rates. You can deposit a aximum of INR 2 lakh per annum in these plans.
Life insurance policies are the best savings plans that have a savings quotient and a life protection cover. There are no limitations on the investment amount, and the interest rates are as high as 10% to 12% for regular insurance policies. And for Unit-Linked Insurance Plans, the interest rates percentage can be as high as the 20s or even more, depending on the risk of the savings plan. The more the interest, the more will be the plan’s risks, so invest in these with caution and only after reading the policy terms.
But a better way to save money through regular life insurance plans and to eliminate risks even from ULIPs, you can invest in Bharti AXA Life Insurance plans. They are one of the major insurance providers in the country with a very high claim settlement ratio. Their interest rates are also very excessive in comparison.
Short Term Savings Plans
Post Office Schemes
Post office schemes are open to all with an interest rate of 7.1% per annum and no limitations on the investment duration. You can invest money for even one year. The maximum amount for investment in these plans is also very high, INR 4.5 lakh per annum for a single account holder and INR 9 lakh per annum for joint account holders.
Fixed deposits are the most popular savings scheme among middle-class Indian families. Although their interest rates are as low as 5% or 6%, they have assured capital and interest returns. There are no limitations on the investment amount or the duration. The interest will also increase with the investment amount and the duration.
National Savings Certificate
These one-time investment plans can give an interest rate of 6.80% per annum for a maximum duration of 5 years. These are also guaranteed savings plans providing assured returns. There are no limits whatsoever for the maximum investment amount.
Equity Linked Savings Scheme
As these plans directly depend on equity, there are no fixed interest rates or the amount you can invest. The maximum duration of investment is for 3 years.
Special Category Savings Schemes
Senior Citizens’ Savings Scheme
These plans are only meant for 60+ individuals for a maximum of 5 years, which you can further increase for 3 more years. The interest rates are also very high, as much as 7.40% per annum. But the maximum investment in the entire term of the plan’s returns at the term-end should not exceed more than INR 15 lakhs.
Sukanya Samriddhi Yojana
These plans with a maximum annual investment of INR 1.5 lakh are solely for girl children. The annual interest rates are also 7.60%. But the duration of investment in these plans is 21 years. So, it is advisable to invest in these plans as soon as the girl child is born to receive the benefits when the child requires funds for higher education, migration for studies or employment, entrepreneurial requirement, or even personal savings.
Kisan Vikas Patra
These are excellent plans solely for farmers, which doubles the one-time invested amount in 124 months. There are no limits on the one-time investment.
P.S. The interest rates and figures are as of March 2022. Also, please do note that although most savings plans have tax relaxations, they have a limitation of a maximum of INR 1.5 lakh per annum. So, if the plan allows investing more than that, it is not advisable to do so as you cannot claim tax relaxations on the amount above this limit.
Proper knowledge of the basic details, investments and returns will be enough to make a well-informed decision on which savings plan to choose. Through this information, you can create a list of plans suitable according to your savings potential and choose the best savings plan from them. These details about the plans are enough to make a healthy comparison based on multiple factors.