With persistently changing financial market scenario and increasing quantity of banks, financial institutions, online resources that give ample opportunities for savings, many people in India are unable to decide the right place to save their surpluses to meet future financial obligations. Hence, people are seeking advise on the most suitable and workable saving methods from the numerous schemes made available by the banks, so as to manage their personal budget in a better way.
Following are some best places to save money in India. These avenues provide guaranteed returns, better interest rates, financial security, tax savings under various sections of Income Tax Work and other benefits that can help you save money. Let us now discuss on the diverse savings schemes that are available in India.
Savings accounts in banks are one of the best schemes to save money in India. They provide security to money as well as earn some interest with time. Savings debris are best avenues for liquid cash, hence, it is advisable to choose savings debris for maintaining emergency cash. These debris do not fee any penalty on money withdrawal. There is also a flexibility of accessing the account by two or more people in case it is a joint savings account.
Recently, the Reserve Lender of India allowed financial institutions to determine their interest rates on savings debris. This decision by the central bank is usually expected to increase savings debris growth and spread financial inclusion across the country. Moreover, the Indian authorities in its 2012-13 budget has allowed for tax exemption on interest up to Rs. 10, 000 on savings debris, which might facilitate maintaining of higher balances in savings deposits.
Repeating deposit (RD)
Recurring debris allow you to spend some specific amount of money on monthly basis for a fixed rate of return. These deposits possess a fixed tenure and at the time of maturity of the debris, the principal sum and the interest earned during that period is usually returned to you. It also provides liquidity to get into savings anytime, but , penalty is billed for premature withdrawal.
Apart from these regular RD, you can also find variable repeating deposits or variable RD. These debris offers the option of varying month-to-month instalment. The minimum amount of month-to-month deposit varies from bank to bank. In many banks, you can invest the minimum month-to-month instalment of Rs. 100 in RD in India. Interest rates of recurring debris vary from lender to lender. Mostly, the rate of interest varies between 7%-10% depending on the tenure of the first deposit. Tax Deduction at Source (TDS) is usually not relevant on repeating deposits in India.
In India, you can open repeating deposit with banks and post office. NRIs cannot open RD in post office but can produce NRE accounts with financial institutions and other financial institutions.
Fixed first deposit (FD)
Fixed deposit or term first deposit is the most common method of investing money. It is suitable for somebody who has a lump sum and wants to invest in a single deposit for any specific period of time. Interest rates of those deposits depend on the tenure of the investment. Longer the tenure, greater the interest price. Premature and partial withdrawals are available, but with a penalty, which vary from lender to lender.
Fixed debris are offered by general public sector/nationalized financial institutions, co-operative financial institutions, Indian personal sector financial institutions and foreign banks. Currently, there are 19 public sector banks, 15 private sector banks, 6 foreign financial institutions and several cooperative financial institutions offering fixed deposits in India.
The period of investment varies from less than 15 days to more than five years. In many banks, the minimum opening deposit is usually Rs. 1, 000 and maximum first deposit is above Rs. 1 crore. You can choose the period of investment combined with the interest payments (monthly, quarterly, annually). The interest price is guaranteed and does not modify for the nominated term.
Moreover in India, many banks offer NRO fixed first deposit accounts and NRE fixed deposit accounts where interest on NRE Fixed debris are tax free but NRO accounts is taxable in India.
Post office savings
The post office savings plan is offered by the Department of Posts in India. It is the oldest banking service organization in India. It works on behalf of Ministry of financing and Authorities of India. Currently, there are more than 20 crores post office savings accounts and these are being operated in more than 1 lakh post offices across the country.
The Indian postal sector offers many post office savings schemes. The savings schemes include saving accounts schemes, repeating deposit schemes, time first deposit schemes, Month-to-month Income Schemes (MIS), General public Provident Finance Schemes (PPF), National Savings Certificate (NSC) and many more. With RBI deregulating interest rates on savings debris, the Government of India also hiked the interest rate on post office savings plan to 4% from several. 5%.
Systematic investment strategy (SIP)
Systematic investment strategy is one of the popular method of investing money in India. It allows a common investor to invest in mutual funds by buying units of mutual finance scheme. It is an approach to invest money with the help of professional management. It inculcates a habit of disciplined savings where an investor can spend regularly rather than investing a big sum each time. The minimum investment in SIP starts from Rs. 500 and there is no maximum limit. In India, tax benefit is available up to Rs. 1 lakh, if SIP is done into Equity Linked Savings Plan (ELSS).
Thus, all the schemes help your hard earned money grow within a period of time. Depending on your goal – short or long term and your need – one time savings or regular savings, you need to select the right savings product that suits you the best.