Indian citizens are earning more and more. The amount of money that they save is increasing. The Indian government has started many saving schemes. These schemes help citizens to increase their savings. In this blog, we will look at some of the best savings plans in India while understanding how they work.
What are saving schemes?
Saving schemes are a type of investment that helps you build your financial future. They can be as simple as putting money into a savings account where it earns interest, or they can be complex and include investments in stocks, bonds and other securities.
There are many different types of saving schemes available in India, but they all have one thing in common — they help you make the most of your money by offering tax benefits and other benefits.
Why is it important to invest in saving schemes?
Saving is an essential part of life. We all need to save money for our future, right? And what better way than with a savings scheme! Let’s take a look at why it is important to invest in saving schemes.
1. Safety:
A savings scheme is a type of investment that allows you to save money without worrying about the safety of your investment. The interest rate offered by these schemes is usually higher than what you can get from other investments, and they are not as risky. They also provide the safety of investments, which the government or an insurance company guarantees. This is a very important reason for investing in saving schemes.
2. Long-term benefits:
Investing in savings schemes will help you secure your future by accumulating wealth over the long run. You can use this money for higher education, buying a house or even starting a small business. The interest earned on your investments will also help pay off your loan or credit card payments and make them less stringent.
3. Tax savings
If you have chosen a scheme based on tax benefits, then you are also investing in something that will help you save tax. This enables you to avoid paying higher taxes on your regular income, gains from investments made through these accounts, and other sources like property or bonds. Therefore, investing in saving schemes is a great way to reduce your tax liability.
4. Retirement funds
Saving schemes also offer an opportunity for retirement planning by providing an account that can be accessed at any time of life, from earning a small amount of interest to meeting large expenses like home loans or medical bills. With these accounts, you can save for retirement and plan for future financial needs without worrying about losing access to the money when you need it most!
Types of saving schemes:
Senior Citizen Saving Scheme (SCSS):
This is a government-sponsored scheme for senior citizens. It provides income tax exemption on interest earned from fixed deposits, life insurance policies and mutual funds. The interest earned is also exempted from the tax.
EPF:
Employees’ Provident Fund is a retirement savings scheme introduced by the Government of India. The basic idea was to provide an assured minimum pension to employees at retirement. An employee contributes 6% of their salary into this fund, which is invested in government bonds and other securities. The corpus accumulates tax-free, while withdrawal is taxable at 10%.
NPS:
The NPS is a defined contribution pension plan which provides means-tested benefits to its subscribers at retirement, old age and disability. The subscriber can contribute any amount that they wish under this scheme.
When an individual starts contributing to the NPS, they will receive a refundable tax deduction at source (TDS). The Government of India then invests this amount in the National Pension Fund (NPS), which is managed by the Life Insurance Corporation of India (LIC). In return for this investment, LIC pays out income from these investment securities over the beneficiaries’ lifetime.
SWP from Mutual funds:
The SWP is an investment option offered by mutual funds. It provides higher returns than other instruments such as PPF and EPF, but the rates are fixed by mutual funds. Mutual funds are investment plans that invest in stocks, bonds, and other securities.
Fixed deposit:
A fixed deposit (FD) is a contract between you and the bank where you agree to deposit a certain amount of money into the bank’s FD account for a certain period of time. After this period ends, you can withdraw your money from the bank’s FD account.
Freo Save Savings Account:
Going with a Freo Save savings account can be your best bet with starting up a saving scheme. As the name suggests, it’s a savings account which offers you an incredible 7% per annum interest rate while keeping your money safe.
No paperwork is involved, so you can skip the queues and complete the process digitally through your smartphone. You also get a virtual debit card that enables you to earn reward points on every spend. These reward points can be converted into cashback; therefore, a Freo Save savings account is the perfect option for you if you are planning to start a savings fund.
Conclusion
To sum up, there are a lot of savings schemes available in India which are designed to target a wide range of investors. Every saving scheme has different risk profiles, but since the government of India supports and secures them, capital prevention is guaranteed in all of them. Therefore, it is important that you start investing in a savings scheme to increase the growth of your overall wealth.
Author Bio:
Naina Rajgopalan has a thing for numbers and a deep facication to learn about all things finance. She’s been moneywise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo Save, a neobank that offers a 7% interest rate on savings along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.