We all want to invest our money in various schemes/investment options through which we get maximum returns. After the interest rates are declared by the Indian Government, you all must search for better investment options than bank FDs.
After a long time of Fixed deposit interest rates declines, RBI has given some hope by indicating that rates may increase shortly.
Poor interest rates and hence poor returns on fixed deposits have been a major discontent for investors, especially the senior citizens who plan their retirement on the regular income from the interest earned on fixed deposits.
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What Are Different Investment Options in India
Currently, a nationalized bank like SBI Bank has interest rates ranging from 2.9 percent to 5.4 percent for various tenures.
The latest interest rates provided on bank FDs are very similar to the interest earned on the deposits in savings bank accounts, which for sure bad news for fixed-income investors.
Here are the best investment options that would pay you more than the bank FDs. Along with this investment, Options will fulfill all your needs.
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Post Office Monthly Income Scheme Account (Mis)
The post office monthly scheme is for a locked tenure of five years. The monthly deposits can be from INR 1000 to INR 4.5 lakhs for single holders and INR 9 lacks for joint holders.
You can open an MIS account on behalf of your name as a single owner or joint owner with a maximum of up to three adults.
These post-office monthly income schemes promise an interest rate of 6.6.% pa. These interest rates do not beat inflation but for sure they are fixed sources of income like FDs.
If we compare the 5-year FD rates of various leading banks in India with the POMIS scheme, then you would find that the POMIS interest rate is much higher and guaranteed as the scheme is backed by the government of India.
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RBI Floating Rate Savings Bonds
RBI has introduced seven-year maturity period fixed deposits. In these FDs six months, the interest rate on RBI Floating Rate Savings Bond is adjusted by the government.
The interest earned on the RBI Floating Rate Savings Bond is fully taxable. The tax shall be deducted from a source.
Bonds can be purchased with a minimum deposit of Rs 1,000 with no limit for maximum deposit. Senior citizens are provided with a special early withdrawal facility for these bonds.
As of today, the interest rate will be 7.15% p.a. and the interest shall be fully taxable.
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National Pension System Tier II
The National Pension System (NPS) Tier II account is a voluntary account. You are eligible to open a Tier II account only if you have an NPS Tier I account.
If you are a central government employee, then the deposits made in the NPS Tier II accounts are liable for an income tax deduction under Section 80C of the Income Tax Act.
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If you are a private-sector employee, then there is no income tax allowance for NPS Tier II deposits. The income earned from NPS Tier 2 is taxable at the relevant slab rates.
In the last year, the NPS Tier II Account Scheme G, which invests in government bonds and related instruments, has produced double-digit returns.
If we look at the current returns of NPS Scheme G Tier II, the 1-year and 3-year returns of NPS Tier 2 are much higher than the FD rates of SBI, which are now kept at 5 to 5.1% only.
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5 Year National Savings Certificates (NSC)
You can get a National Savings Certificate from any post office. NSC is also a fixed-income investment scheme. NSC is a savings fund offered by the Government of India.
It gives you tax benefits and fixed returns too. This scheme is like Public Provident Fund and Post Office FDs and is a safe and risk-free investment option.
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You can purchase it for yourself, for a minor, or jointly with your spouse. As the name suggests, it comes with a maturity period of 5 years.
Although the interest earned in the first four years is reinvested, interest earned in the fifth year is subject to taxation at the applicable tax slab rate of the investor or subscriber.
The certificates provide a fixed rate of interest, which is now 6.8% per annum.
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Senior Citizen Savings Scheme
If you are 60 years old or older than that, then invest in SCSS. Currently, SCSS provides an interest rate of 7.4 percent per annum. SCSS allows only one deposit in the account.
You can invest in multiples of Rs 1000 with a maximum limit of Rs 15 lakhs. Investors can open multiple accounts, either individually or jointly with their partners.
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The maturity period is 5 years and can be extended in the block of 3 years. Quarterly interest in SCSS accounts is deposited on the first working day of the start of each quarter, i.e., April, July, October, and January.
As per Section 80C of the Income Tax Act, 1961, investments made in a Senior Citizen Savings Scheme account are eligible for an income tax deduction of up to Rs. 1.5 lakh.
Interest earned is fully taxable. Tax Deducted at Source (TDS) is applied on interest accrued if the interest earned is more than Rs. 50,000 in a fiscal year.
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Small Finance Bank FDS
Some of the small financial banks’ FDS offer an interest rate of 4.25% per annum to 7.75% per annum. These rates are slightly higher than the rates offered by major public sector banks and private sector banks.
Senior citizens earn a 50-basis point higher on these deposits. Compared to other top lenders, these banks pay competitive interest rates.
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Kisan Vikas Patra
A single individual, joint or adult serving on behalf of a minor can invest in Kisan Vikas Patra to get a fixed rate of interest of 6.9% compounded annually. KVP is available at the Departmental Post Office.
Deposits in KVP can be made with a minimum of INR 1000 and can be increased in multiples of Rs. 100. KVP does not have the upper limit of investment. Kisan Vikas Patra comes with a maturity period of 124 months.
Once matured, you can withdraw the accrued corpus. Investors of Kisan Vikas Patra are not eligible for any income tax benefits.
The investment is not liable for an 80C allowance, and the interest earned upon maturity/withdrawal is entirely taxable.
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Company Fixed Deposits
Company Fixed Deposits Investors who want better returns than bank FDs, though at a marginally higher risk, consider corporate FDs. Interest on corporate FDs, like FDs, is entirely taxable at the effective tax rate of the investor.
Because of the risk, it is not secure to invest in corporate FDs for risk-averse investors. However, if you choose to invest in them, you can select corporations with high ratings to reduce your risk.
An AAA or AA rating means that the issuer’s risk capacity is good in terms of prompt payment. The stronger the rating, the greater the corporation’s risk potential.
We hope with these different investment options you can invest and earn from your deposits.
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Better Investment Options Than Bank FDS: FAQ
What is the Meaning of Investment
This is the process of Investing Money for Profits.
What is Foreign Direct Investment
Foreign Direct Investment (FDI) is an investment by a company or a firm based in one country into a company or firm in another country.
Where to Invest Money
Invest your money where you get good profit with risk-free investment options. like
1. Post Office Monthly Income Scheme Account (Mis)
2. RBI Floating Rate Savings Bonds
3. National Pension System Tier II
4. 5 Year National Savings Certificates (NSC)
5. Senior Citizen Savings Scheme
6. Small Finance Bank FDS
7. Kisan Vikas Patra
8. Company Fixed Deposits
How to Earn Money from Home Without Any Investment
Do a freelancing job. Here you can work from home or from anywhere in the world and earn good money. To know more Click Here
How to Invest Your Money
First research for good investment options. Then start with a small amount in different options and then calculate your return. According to that start investing a bigger amount.
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