Most Popular saving schemes in India

Investment can be defined as an activity by which people engage their savings with the expectations of a return. Returns are an important part of investment. There are two types of investment-financial investment and capital investment. Financial investment includes dividend premium, pension benefit etc and capital investment includes purchasing of post office certificates,shares,debentures etc

Further it must also be noted that investment acts a safety net after retirement,helps in beating inflation,during unemployment,for the purchase of assets (like car,house) in the future.

In India there is a entire sea of investment schemes.Some of the most trusted and popular investment schemes are as follows:

1. PPF: The PPF is the acronym for Public Provident Fund.It is a saving cum tax saving scheme.It was introduced to encourage small scale savings.The PPF account can be opened in selected nationalised bank and post office.The maturity period of PPF account is 15 years.The minimum investment per year is Rs 500 and the maximum investment is Rs 1.5 lakhs.The amount invested in a PPF account is tax deductable.the rate interest is fixed by the central governmnet and varies every year.At present the rate of interest that has been fixed for the PPF account is 7.9% per annum.The governnet alows premature withdrawal from the corpus fund on special occasions.Withdrawals are allowed from the 5th year onwards from the date of its opening.

2. NSC:The NSC is the acronym for National Saving Certificate. It is a saving scheme backed by the government.NSC can be bought in the following denomination,Rs100,Rs500,Rs1000,Rs5000 and Rs10000.Tax is exempted only upto 1.5 lakhs per annum.However the interest earned on the NSC certificates are taxable.The rate of interest earned on NSC is 8.5% .

3. ELSS:It refers to equity Linked Saving Scheme.It is a tax saving mutual fund.Although there is no upper limit on the maximum amount of investment on ELSS,tax is exempted only upto 1.5 lakh as per the guidelines of section 80c of the Income Tax Act 1961.Tax is also exempted from the interest earned on ELSS.The interest earned on the other hand depends upon market variation and goes as high as 15 to 16%.

4. LIFE INSURANCE:The life Insurance is the fastest growing sector in India since 2000 when private companies were allowed and Foreign Direct Investment were allowed to invest upto 26% by the cabinet.The minimum term period of life insurace is 5 years.The rate of interest on life insurance may vary form 0% to 6%.Tax is not deducted from the rate interest earned.

5. FIXED DEPOSIT:The term period of fixed deposit varies from 7 days to 10 years.There is no upper limit on the maximum amount of deposit.The rate of interest on Fixed deposit differs from one bank to another starting from 3.5% to 9%.Pre mature withdrawals are allowed but fine or penalty is charged against it.

6. RECURRING DEPOSIT:The minimum lock in period of recurring deposit starts from 1 year to 10 years.The minimum amonut of deposit should per year should not be less than Rs 1000.Just like the fixed deposit the rate of interest on recurring deposit varies from one bank to another starting from 4% to 9.5%.However tax is not exempted if the interest earned is more than Rs10000 per year.

7. NPS:It stands for National Pension Scheme.The minimum deposit on NPS is Rs6000 and there is no limit on the maximum amount of investment.Both Indians as well as NRIs are allowed to open a NPS account.However a person should be an adult as minors cannot have a NPS account.

COMPARISON OF ALL THE INVESTMENT OPTIONS

An investment of all the investment options can be made with the help of the following table: