Who does not like to grow their savings slowly and steadily? In India, numerous investment avenues allow you to get good returns over time and grow your savings. However, you may feel confused about where to invest with a plethora of choices. To term a specific investment scheme as the ‘best,’ you must be aware of your investment goal and risk-taking capacity and check if the investment meets your needs.
Most Indians tend to invest in long-term savings schemes that are backed by the government of India as they are considered safe. If you are looking for government schemes that offer valuable returns, here are a few popular options that you can consider.
NPS (National Pension System)
NPS is one of India’s most popular long-term investment avenues as it is backed by the Government of India. It is a savings system where you voluntarily contribute a small amount periodically to your NPS account throughout the working years and build a corpus for the future. It allows you to secure life after retirement, draw a pension and get a regular income to cover your post-retirement expenses.
NPS is regulated by PFRDA (Pension Fund Regulatory Development Authority of India), and it gives you exposure to investing in several money market instruments like corporate bonds, liquid funds, equity shares, etc.
Let us look at the features of NPS
- Flexible contribution
You can subscribe and contribute to your NPS account anytime in a financial year. You also have the flexibility to invest any amount you want, provided the minimum contribution in a year is Rs. 1000.
- Freedom to choose Investment Strategy
NPS gives you the flexibility to invest in different asset classes to suit your goals and risk appetite, and the Pension Fund managers ensure that your money grows in the long run.
- Tax Benefit above 80C
NPS gives you tax benefit over and above the tax benefit of section 80C and this feature makes NPS the first choice of the majority of investors.
You can operate your NPS account from anywhere you want, even when you switch jobs or move to a new city.
NPS has completely transparent investment norms, and the authorized fund managers regularly monitor your account and review the funds’ performance.
PPF (Public Provident Fund)
PPF is another popular government-backed investment scheme. It has a mandatory lock-in period of 15 years, and it is considered one of the safest investments. PPF offers a higher interest rate than savings bank accounts like bank fixed deposits.
It is best suited for your long-term financial goals. And, since the investment is not market-linked, it offers assured returns over time. Upon maturity, you can withdraw the entire corpus in a lump sum or extend the investment in a block of five years.
Atal Pension Yojana (APY)
APY is a social security scheme launched by the Government of India to cater to the needs of the workers in the unorganized sector. All Indian citizens aged between 15-and 40 years who have a valid bank account can apply for the scheme.
It encourages the individuals from the weaker sections to opt for a pension plan that would benefit them during their old age after they stop working. The scheme is available for both self-employed and salaried individuals.
If you qualify for the scheme, you can enroll through a bank or post office. However, you must contribute to the scheme until you reach the age of 60. At the end of the contribution period, you can get a guaranteed pension ranging from Rs. 1000 to Rs. 5000 based on the contribution amount and investment tenure.
Sovereign Gold Bonds (SGB)
Indians are known to have a fascination for gold, i.e., the yellow metal. People in India have been buying physical gold or gold jewelry for a long time. Today, however, you can invest in other forms of gold like sovereign gold bonds.
The Government of India introduced SGB in November 2015 and aims at offering a lucrative alternative to owning physical gold. Additionally, since the scheme belongs to the debt fund category, they are regarded as one of the safest investment options that offer stable returns and financial stability in life.
Sovereign Gold Bonds for SGBs ensure complete transparency and helps in tracking the overall import-export value of the given asset.
National Savings Scheme (NSC)
The Government of India launched the NSC to promote the habit of savings amongst Indians. You can join the scheme with an initial deposit of Rs. 1000 and thereafter contribute to the scheme in the multiples of Rs. 100 and there is no upper limit on investment amount. The scheme assures the safety of your capital investment and provides stable returns.
The interest rate for NSC changes every year and it is compounded annually. Another significant feature of this scheme is that the interest is payable at maturity. The scheme is available only for resident Indians and you can claim a tax benefit up to Rs. 1.5 lakhs under Section 80C of the Indian Income Tax Act on the amount you contribute to the scheme.
Now that you know of the different government-backed investment schemes in India, you can choose to invest in any or all of them to accomplish your long-term goals. But NPS is a must-have in your portfolio as it helps you be financially independent during your old age and get regular income even after you hang your boots. To know more about NPS or open an NPS account, visit the HDFC Pension Funds website.