Small investors often look for a number of investing options for wealth creation. For long term investors, there are such options as equity investment, mutual funds and bonds.
Conservative investors, meanwhile, tend to opt for fixed-income instruments such as fixed deposits (FDs), debt mutual funds and small savings schemes, also known as post office savings schemes.
Here we give a lowdown on small savings schemes which are easy to invest, give assured but muted returns to investors. It is a common knowledge that risk and returns go hand in hand and higher the risk, higher the return and vice versa is true as well. Put simply, when you are looking for assured returns, the return would be lower than market returns.
I. Post office savings account: Investors can make a minimum investment of ₹5,000 in these schemes where there is no maximum limit. Interest offered up to ₹10,000 is tax free. The current interest rate offered on these schemes is 4 percent.
II. Post office time deposit account: One can make a minimum investment of ₹1,000 and in multiples thereof. Interest is calculated on quarterly basis and payable annually.
The tax exemption under section 80C is available in 5-year time deposit. These plans are available in 1 year, 2 years, 3 years and 5 years. Interest rates offered on these plans are as follows:
| Tenure (year) | Interest rate |
| 1 | 6.9% |
| 2 | 7% |
| 3 | 7.1% |
| 5 | 7.5% |
| 5-year recurring deposit | 6.7% |
III. Senior citizen savings account: There is a minimum of ₹1,000 investment and a maximum of ₹15 lakh. Interest is payable quarterly and can be prematurely closed. Depositors can claim tax exemption under section 80C of Income Tax Act.
These schemes offer 8.2 per cent per annum interest to depositors.
IV. Monthly income scheme account: One can invest a minimum of ₹1,000 and maximum of ₹4.5 lakh in single account and ₹9 lakh in joint. Interest is payable every month. These schemes offer 7.4 percent per annum interest to depositors.
V. National Savings Certificate: One can invest a minimum of ₹1,000 and there is no maximum limit. And depositors are entitled to claim tax exemption under section 80C of Income Tax Act. These schemes offer 7.7 percent per annum interest to depositors.
VI. Public Provident Fund (PPF): One can invest a minimum of ₹500 and maximum of ₹1.50 lakh in a financial year. Interest accrued on PPF is tax-free. These schemes offer 7.1 per cent per annum to depositors.
VII. Kisan Vikas Patra: There is a minimum of ₹1,000 investment and no maximum limit. The money doubles on maturity. These schemes offer an interest of 7.5 per cent per annum to depositors
