Post office schemes are most popular amoung the population that believes in making small, secure savings. The schemes are especially popular for allowing investors to make deposits as small as Rs 100 and with a guarantee on returns, as it is backed by the government.
India Post schemes range from recurring deposits, fixed deposits, certificates, pension schemes to special schemes made just for farmers.
What factors do you need to consider before you choose the best FD Scheme?
The interest rate is the most obvious factor. We all want the most returns out of our investments so naturally, we will choose the bank/financial institution that gives you high interest rate.
However, do not be blinded by the high interest rate. An unknown financial company could offer you as much as 15% interest rate, only to end up as a scam before your deposit matures.
So before you invest, understand the credibility of the institution. Government-backed institutions like India Post are the most secure, as there is a 100% guarantee that you will get the interest you were promised.
Other things you can look into are ratings provided by reliable research organisations like ICRA and CRISIL. You can go for schemes rated "A" by them.
The term of the deposit also matters. Short-term deposits usually have lower interest rates.
Also, look at the interest compounding rate. When your interest generated is reinvested, it will fetch you a higher amount. So compare if your deposits are compounded quarterly or half yearly or annually.
Here are some Fixed Deposit Schemes by India Post and their interest rates:
1. Post Office Time Deposit Account
This account works like any other normal Fixed Deposit scheme. You deposit the money for a term and you will receive your money with interest earned at the end of the term.
The account can be opened for a minimum of 1 year and the maximum tenure is 5 years. The premature closure of an account is allowed here.
The interest rate for post office time deposits are:
|Term||Interest Rate (Compounded Quarterly)|
2. Senior Citizens' Savings Scheme
The senior citizens' savings scheme is designed for individuals over 60 years of age. The account has a maturity period of 5 years and the deposit can be made only once in a lumpsum. The minimum amount that can be invested is Rs 1,000 and the maximum is Rs 15 lakhs. The interest rate on this scheme is 8.3%.
3. 15 Year Public Provident Fund
PPF if a popular scheme which allows you to make your investment in 12 monthly installment basis or in a lump sum. It has a lock period of 15 years with an interest rate of 7.6% currently.
You are also allowed to increase the amount you wish to invest but make sure you deposit before the 5th of the month to avail the interest on the account for that month.
You can also transfer You PPF account from the bank to a post office.
Premature closure is not allowed on this account.
4. Post Office Monthly Income Scheme
This is especially suitable for retirees and those without a steady source of income. It comes with a 5 year maturity period where the maximum amount that can be invest is Rs 4.5 lakhs under single ownership or Rs 9 lakhs in joint ownership. The deposits have to be made in multiples of Rs 1,500.
The interest rate is currently 7.3%, is reset every quarter. As the name suggests, interest will be paid monthly.