Let’s break the tradition of investing in age-old safe investment options like FDs and gold, and explore some of the safest government-backed investment schemes for your portfolio.
Investing in FDs and gold for safe returns is something that we have seen our parents doing all their lives. But with changing times, we must look ahead of the traditional investment options and say yes to investing in tax saving and safe investment options.
Today, let’s explore a few government-backed investment schemes which offer better and safer returns than our FDs and gold.
10 Government-Backed Investment Schemes to Invest
National Savings Certificate
Are you looking for a safer alternative to fixed deposits while saving tax? If yes, then NSC is for you. Under this scheme, the government sets an interest rate as per the current inflation rate. The scheme comes with two different maturities of five years and ten years. Moreover, you can keep this certificate as collateral for a loan and also save taxes up to Rs 1,50,000 per annum under section 80C of the Income Tax Act.
National Pension Scheme
Are you looking for an investment option to cover your retirement? If yes, then the NPS scheme is for you. Under this government scheme, the government would offer you regular income post your retirement. Moreover, while investing, you can choose your asset allocation in equity and government securities as per your risk appetite.
It also offers tax deduction benefits of up to Rs 1,50,000 per annum under Section 80C.
Public Provident Fund
Are you looking to create compounding wealth in the long term? If yes, then the powerful PPF is your way to go. This is a very popular investment option among investors with a maturity period of 15 years. Moreover, you can also start a monthly SIP to keep up with your tax-saving investment. At the end of the year, you can avail tax exemption of up to Rs 1,50,000 per annum under section 80C of the Income Tax act, and the returns you earn upon maturity are also not taxable.
Sovereign Gold Bonds (SGBs)
The age-old gold investment now has a modern touch in the form of Sovereign Gold Bonds. The RBI issues these bonds on behalf of the government. The tranches are issued various times in a year according to the price of one gram of 24-carat 999-purity gold. When you buy the units of gold bonds, you are offered a 2.5% simple interest half yearly on the issue price of gold. You can redeem your investment prematurely after 5th year, and the bond matures in 8 years. If you hold the bond for eight years, no capital gains tax will be levied.
Isn’t this a safe, tax-saving and hassle-free option for investing in gold?
Sukanya Samriddhi Yojana (SSY)
Are you blessed with a beautiful girl child? It’s time for you to secure her future by investing in SSY. You can open an account for your girl child before she turns 10. You must deposit money until your girlchild turns 15 and can make a partial withdrawal when she turns 18. But remember, the scheme has a lock-in period of 21 years. Your contribution of up to Rs 1,50,000 is eligible for tax deductions under Section 80C of the Income Tax Act every year.
Atal Pension Yojana (APY)
The APY scheme is a pension scheme for people who fall in the weaker sections of the economy. Under this scheme, you must invest for at least 20 years to qualify for the pension. You can start investing in the scheme from age 18, and accordingly, you will get a fixed amount after you retire.
Pradhan Mantri Jan Dhan Yojana (PMJDY)
The PMJDY is another scheme for low-income groups which offers a zero-balance savings account to people who do not have a bank account. This scheme offers a savings account just like a bank account but has a unique feature as it provides an overdraft facility.
Senior Citizens Savings Scheme (SCSS)
Are you a retired individual looking for higher returns than FD? You can now invest in the SCSS scheme. Under this scheme, you can earn higher interest than similar low-risk investments. It has a tenure of five years, and you can further extend the tenure by three years.
Remember that the interest you earn under this scheme is taxable, and if the interest exceeds Rs 50,000 in a year, then Tax Deducted at Source (TDS) will be applied.
Prime Minister Vaya Vandana Yojana (PMVVY)
This scheme is an insurance policy-cum-pension scheme for senior citizens offered by the Life Insurance Corporation of India. The aim of the scheme is to provide senior citizens with a regular pension when there is a fall in interest rates. The tenure of the PMVVY scheme is ten years, and after three years of investment, you can use the certificate as collateral for a loan.
Kisan Vikas Patra
Kisan Vikas Patra is a saving certificate scheme initially offered for farmers but is now open to everyone. It has a tenure of 112 months and offers no tax benefits, but you can use the certificate of this scheme as collateral for a loan.
To conclude, all the above schemes are safe investment options as the Government of India issues them. Now that you know the alternatives of investing in a bank FD, choose an investment to diversify and balance your portfolio for good returns.