JUST a decade ago, the most sought after investment option were small savings +schemes.
Though many investors have taken a liking to equities now, some allocation to safe fixed income investments helps to balance the portfolio.
Here are the popular small savings schemes you can include in your investment portfolio.
1. Kisan Vikas Patra (KVP)
The Kisan Vikas Patra or KVP was launched with an eye on the large potential in the rural areas. Investments in KVP double every 8 years and 7 months. The rate of interest is 8.41 per cent pa approximately.
• Certificates are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000, Rs 10,000 and Rs50,000.
• You can purchase the certificates at any Post Office.
• There is no maximum limit on the number of certificates purchased.
• An identity slip will be issued to you on request.
• On maturity, you can encash the certificates at the issuing post office. They can also be encashed at any other post office, once the officer-in-charge verifies your identity.
• You can also nominate someone to receive the money.
2. Post Office Monthly Income Scheme
If you want to receive a monthly income, this scheme may be right for you.
• You can open an account with any post office either singly or jointly, with a nomination facility available.
• Interest rate of 8 per cent pa is payable monthly.
• Minimum investment amount is Rs 1500 and maximum is Rs 450,000 for single accounts and Rs 900,000 for a joint account.
• Maturity period of the scheme is six years.
• You can transfer your account from one post office to another across India, without any cost.
3. National Savings Certificates (NSC) (VIII Issue)
This scheme has been designed for the benefit of not only adults but minors as well. The rate of interest is 8 per cent pa with a duration of six years.
• You can purchase NSCs for yourself or for a minor, where it can be taken jointly by two adults, a minor and a trust.
• Nomination facility is also available.
• Certificates in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 can be purchased from any post office, either directly or through authorised agents.
• Besides cash; local cheques, pay order or Demand Draft (DD) drawn in favour of the postmaster are also accepted.
• You can encash these certificates at the post office where they are registered or at any other post office once the officer in charge verifies the registration.
4. Post Office Time Deposits
This scheme take investments by minors a step further since it makes it possible for minors themselves to invest in directly.
• You can open an account either singly or jointly. Even a minor of 10 years and more can open an account directly.
• The duration and rate of interest is: one year -- 6.25 per cent, two years -- 6.50 per cent, three years -- 7.25 per cent and five years -- 7.50 per cent.
• Nomination facility is also available.
• Different accounts for different maturity periods can be opened in one name.
• If you withdraw your amount after six months but within a year of investment, you wont get any interest. If you withdraw prematurely after one year of investment, interest will be paid at 2 per cent less than the rate of interest specified for the period for which you deposit the money.
5. Reserve Bank of India’s Savings Bonds
This is one of the safest investment since it is issued by the country's central bank.
• There is no maximum limit for investment in the bonds.
• Both half-yearly and cumulative interest options are available.
• The bond's duration is five years.
• Earlier, RBI bonds were of two types: 6.5 per cent tax-free bonds and 8 per cent taxable bonds. The former, that is, 6.5 per cent tax-free bonds have been discontinued since July 9, 2004. Today, only the 8 per cent bond is on issue.
- Source (Moneycontrol)
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