Best Investment Plans for Government Employees

Best Investment Plans for Government Employees : Almost everyone would like to take up a government job as it offers the much-needed job security which most private jobs don’t. Apart from job security, government employees enjoy various other perks and benefits. Moreover, they are entitled to get a monthly pension on retirement. However, the government employees too should make tax-saving investments to avail tax deductions. We have covered the following in this article:

General Provident Fund

General Provident Fund (GPF) is the government employees’ version of the Employees’ Provident Fund (EPF). Some portion of the government employees’ salary is compulsorily deducted for contributing towards GPF. However, you can give the mandate to deduct a sum higher than the compulsory minimum contribution. GPF accounts offer much higher returns (8.5% p.a.) than a regular savings bank account. What’s more? Investments in GPF accounts are completely safe as these are backed by the government.

LIC Policies

LIC policies are very popular among government employees. Life Insurance Corporation (LIC) is a state-owned insurance and investment company. The most popular LIC policies are money-back policies. These policies come with a tenor of 20 years and 25 years. It provides life coverage over the policy period and pays out survival benefits once every five years. If an unfortunate event takes your life, then the nominee or beneficiary is paid out with the sum assured of the policy. What’s more? The premium paid towards LIC policies is tax-deductible as per Section 80C provisions of the Income Tax Act, 1961.

Public Provident Fund

Public Provident Fund (PPF) is the most popular investment option offered by the government. Moreover, it is covered under Section 80C of the Income Tax Act, 1961. You can invest a maximum of Rs 1,50,000 a year. Like GPF, PPF is a very secure investment option as the sovereign guarantee backs PPF investments. Also, PPF accounts offer way higher returns than a regular savings bank account. These accounts come with a lock-in period of 15 years and hence they are ideal for long-term planning and wealth accumulation.

Mutual Funds

Mutual fundsare one of the most popular investment options these days. Mutual fund investments are on the rise these days and this attributes to the growing awareness among the people about the ability of mutual funds to offer inflation-beating returns. If you are ready to bear some risk, then you can invest in equity funds. If you are completely risk-averse, then you can go with debt funds. If you want to balance the risk-reward, then you can invest in hybrid funds. If you to save taxes along with investment, then you can invest in equity-linked savings scheme (ELSS). ELSS mutual funds are covered under Section 80C of the Income Tax Act, 1961, and offers tax deductions of up to Rs 1,50,000 a year.

Bank Deposits

Saving money in a regular savings bank account will not yield you much. To earn considerable returns, you need to invest in fixed deposits or recurring deposits. If you have a considerable amount at your disposal, then you can invest it in fixed deposits (FDs), which is offered by all banks and some non-banking financial companies (NBFCs). If you would like to invest a fixed amount on a monthly basis, then you can invest in recurring deposits (RDs). Bank deposits offer assured returns and the investments are absolutely safe.

National Pension Scheme (NPS)

NPS is a government backed scheme which makes it a very safe investment option for salaried people. The employee has the freedom of choosing how their investment is being channelised into equity, corporate bonds or government securities. The most lucrative thing about NPS is that all contributions are eligible for a tax deduction under section 80CCD(1B) for a maximum amount of INR 50,000.