What Is Savings?
Savings are income not used for current expenses but reserved for future costs. They assist individuals in coping with financial risks, realising financial objectives, and maintaining a good lifestyle.
Types Of Saving Schemes
- Fixed Deposits (FD): Safe investment with a fixed interest rate for a specified duration.
- Public Provident Fund (PPF): Tax-free long-term investment with a 15-year term.
- National Savings Certificate (NSC): Government scheme with a 5-year lock-in period.
- Senior Citizens Savings Scheme (SCSS): High-interest scheme for citizens above 60 years.
- Sukanya Samriddhi Yojana (SSY): For saving for a girl child's future.
- Kisan Vikas Patra (KVP): The investment is doubled in a specified tenure.
- Equity-Linked Savings Scheme (ELSS): Tax benefits mutual funds.
- Atal Pension Yojana (APY): Unorganised sector workers retirement savings plan.
- National Pension System (NPS): Investment of pension funds in retirement planning.
- Post Office Monthly Income Scheme (POMIS): Monthly interest income provision.
- Pradhan Mantri Jan Dhan Yojana (PMJDY): Financial inclusion savings plan with insurance coverage.
Advantages Of Saving Schemes
- Financial Security: Facilitates people in creating an economic buffer against sudden expenses.
- Wealth Building: Provides a systematic way of making money over time.
- Retirement Planning: Guarantees post-retirement financial security.
- Tax Relief: Most saving schemes give tax concessions and relief.
- Incentives Savings: Assists in long-term financial planning.
- Reduces Loan Dependence: Savings diminishes the necessity to borrow funds.
- Develops Saving Habit: Helps individuals adopt a habit of savings.
Key Takeaways
Indian government-sponsored savings plans ensure financial security and long-term advantages, with Aadhaar and PAN now being a requirement for investment since April 2023. Different schemes serve different purposes, with interest rates ranging from 4% (Post Office Savings) to 15% (NPS/ELSS). Most schemes like PPF, EPF, SSY, and NPS offer tax relief under Section 80C, making them very popular among investors looking for tax-free returns and wealth creation.
