New Delhi: If you are a risk averse investor and you are not looking for double-digit returns and still want to achieve all of your financial goals such as building a body for retirement, raising children, marriage, buying a house, etc. investment plans that offer a guaranteed return as well as capital protection.
Some of these plans are backed by the government and therefore are very secure. Some of these plans are designed exclusively for seniors to meet their financial needs after retirement, while others are intended to build up a body of work for your daughter’s education and marriage.
So it makes sense to transfer your money from a savings bank account or term deposit to these instruments, as you will also get more return and tax benefits in some cases. These investments will also help you achieve your long-term goals.
Here is a list of 9 investment programs and their main characteristics:
1. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
– This is a ten-year government-sponsored pension plan intended for retirees aged 60 and over. This scheme aims to offer a fixed income to seniors for a period of 10 years.
– For fiscal year 2021-22, PMVVY will provide you with an insured pension @ 7.40% per annum as a monthly interest payment method on your invested capital. At the end of the mandate, the amount of the investment or the purchase price will be returned to the investor.
– Those who invest in the program no later than March 31, 2022, will receive 7.40% interest for the next 10 years.
– Depending on the pension option (monthly, quarterly, annual), a fixed and insured pension is paid at the end of each period.
– The maximum investment that can be made in PMVVY is limited to Rs 15 lakh per senior and the maximum monthly pension in PMVVY is Rs 9,250 per senior.
– Thus, if both spouses are over 60 years old, the maximum monthly pension can be Rs 18,500 in the family on an investment of Rs 30 lakh. The pension in PMVVY does not depend on the age of the investor.
– This diagram is exclusively marketed by LIC until March 31, 2023. It can be purchased offline or online.
2. Seniors Savings Plan (SCSS)
– As the name suggests, SCSS is intended for people aged 60 and over.
– A natural person aged 55 or over but under the age of 60 who has retired on a retirement pension or under VRS can also open a SCSS account provided that the account is opened within the month following the receipt of benefits from pension and the amount must not exceed the amount of pension benefits.
– The SCSS account expires in 5 years. More than one SCSS account can be opened but the combined investment in all accounts cannot exceed Rs 15 lakh.
– The interest earned through this scheme is fully taxable in the hands of the investor and is taxed according to his slab of income.
– After maturity, the account can be extended for a period of three years within one year from the expiration.
– The interest rate for this scheme is set by the government every quarter. But once you invest in the program, the interest rate is locked in for the entire five-year term. For the quarter running April-June, SCSS offers interest of 7.4% per annum, payable quarterly.
3. Sukanya Samriddhi Yojana (SSY)
–Sukanya Samriddhi Yojana (SSY) is for parents of a girl to create a corpus for their higher education and marriage.
– The SSY is a 21-year-old device and can only be opened on behalf of a girl under 10 years old. If the child is 7 years old, then maturity of SSY will occur when the child turns 28.
– As a parent, one must only deposit during the first 15 years and during the last six years even if the plan continues, no deposit is to be made.
– Only for medical reasons, a person is allowed to leave the diet prematurely. Once the girl reaches the age of 18, a maximum of 50% of the funds from the previous year can be withdrawn for the higher education of the girl.
– Once the girl turns 18 and decides to get married, the SSY account can be closed.
– Investment in SSY is eligible for income tax deduction under Section 80C of the Income Tax Act 1961. The maximum annual investment allowed in the program is Rs 1.50 lakh.
– For the current quarter (April-June), the interest rate offered on this program is 7.6% per year, compounded annually and paid at maturity.
4. Atal Pension Yojna (APY)
– It is a power plant government plan, which aims to provide an assured pension to individuals after retirement. This scheme is administered by the Pension Fund Development and Regulatory Authority (PFRDA) as part of the NPS architecture.
– Any Indian citizen between the ages of 18 and 40 can enroll in the program.
– Under this scheme, subscribers would receive the fixed minimum pension of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, rupees. 5000 per month depending on their investment.
– The amount of the pension depends on the employee’s contribution and his age of employment. The pension from this plan will begin once the subscriber reaches the age of 60.
– This monthly pension would be available to the subscriber, then to his spouse and after their death, the pension corpus, as it was accumulated at the subscriber’s 60 years, would be returned to the subscriber’s agent.
5. Public provident fund (PPF)
– The PPF is one of the most popular long-term investment programs and requires the payment of a regular contribution for 15 years.
– However, the subscriber has the possibility of leaving the system after 5 years under certain conditions. The loan facility is available in the plan from the 4th year while the partial withdrawal option is available after the 7th year.
– An individual can open two PPF accounts – one for himself and another for a minor child. But the maximum investment in the two accounts cannot exceed Rs 1.5 lakh during a financial year. A minimum investment of Rs 500 must be made in the PPF account each year.
– The annual investment in the PFF account gives the right to a tax advantage under article 80C, the interest earned and the corpus of maturity are also exempt from tax.
– Post maturity, the PPF account can be extended several times per block of five years (with or without contribution).
– The interest rate for this scheme is decided by the Center every quarter. For the quarter running April-June 2021, the PPF account bears an interest rate of 7.1% per year, compounded annually.
6. Kisan Vikas Patra (KVP)
– This device is available in postal agencies, any adult can buy it either in his name or in the name of a minor child.
– The minimum investment required in KVP is Rs 1,000 but there is no maximum limit.
– This can be transferred from one person to another and from one postal agency to another.
– The investor obtains double the amount he invested after 124 months, including capital and interest. However, in an emergency, KVP certificates can be surrendered at any time after 2.5 years from the date of purchase.
– For the quarter running April-June 2021, KVP achieves a return of 6.9% compounded annually.
7. Postal Term Deposit Account (TD)
– This is quite similar to a fixed bank deposit and is available in four terms – 1, 2, 3, and 5 years.
– However, section 80C benefits are only available in the 5-year TD plan.
– Although there is no maximum investment limit, a tax benefit is available on an annual investment of up to Rs 1.5 lakh in 5 years TD. But the interest earned through this scheme is fully taxable depending on the individual’s tax base.
– interest under this plan is paid annually. No monthly or cumulative options are available.
– For the quarter running April-June 2021, the interest rate offered on the 5-year TD is 6.7% per year, payable annually but calculated quarterly.
8. National Savings Certificate (NSC)
– NSC only requires a lump sum payment for a period of five years and there is no need to pay any further contributions. At maturity, a fixed amount is collected which is known at the time of investment.
– NSC is issued in denominations of Rs. 100, rupees. 500, Rs.1000, Rs.5000, Rs.10,000.
– Interest is fully taxable, but most importantly, interest is reinvested for the first four years and is also eligible for section 80C benefits.
– Currently (April 1 to June 30, 2021), the interest rate on CNS is 6.8% per year, compounded annually and paid at maturity.
9. 2020 Variable Rate Savings Bonds
– The 2020 Variable Rate Savings Bonds (taxable) come with a 100% guarantee as they are government backed investments. One can invest through branches of State Bank of India, nationalized banks and four specified private sector banks.
-They have a term of 7 years and the interest rate will continue to vary during the life of the plan.
– The interest rate was set at 7.15 percent per annum payable semi-annually.
– Interest on the bonds will be payable semi-annually on January 1 and July 1 of each year. There is no option to pay interest on a cumulative basis.
– The minimum investment amount is Rs 1000, while there will be no maximum limit for investments made in the Bonds. The maximum cash investment can be made up to Rs 20,000.
– The interest rate is linked to the rate of the national savings certificate (NSC) in force with a deviation of 35 basis points from the respective NSC rate.
– Early repayment is authorized for certain categories of elderly people