Saving plans are financial instruments designed to help individuals save money for future financial goals such as retirement, children’s education, or buying a house. Here are the main types of saving plans in India along with their details:
Types of Saving Plans
- Unit Linked Insurance Plans (ULIPs)
- Combine life insurance and investment.
- Part of the premium is invested in equity or debt funds, offering market-linked potential returns (13.8% to 27.5%).
- Provide life cover along with investment growth.
- Flexible in terms of fund switching to manage risk.
- Public Provident Fund (PPF)
- Government-backed long-term saving scheme.
- Fixed interest rate around 7.1% per annum.
- Tax benefits under Section 80C.
- Minimum yearly deposit ₹500, max ₹1.5 lakh.
- Lock-in period of 15 years.
- National Savings Certificate (NSC)
- Fixed income government-backed scheme with around 7.7% interest.
- Tax deduction up to ₹1.5 lakh under Section 80C.
- Maturity period of 5 years.
- Low risk suitable for small to medium investors.
- Senior Citizen Savings Scheme (SCSS)
- Designed for individuals aged 60 years and above.
- Interest rate around 8.2%.
- Lock-in period 5 years, extendable further.
- Provides steady income through quarterly interest payments.
- Eligible for tax benefits under Section 80C.
- Recurring Deposits (RD)
- Fixed monthly deposits with banks/post offices.
- Interest rates vary from 2.5% to 8.5%.
- Flexible tenure, no tax benefits.
- Post Office Monthly Income Scheme (POMIS)
- Government scheme offering fixed monthly income.
- Interest rate roughly 7.4%.
- Suitable for retirees desiring steady cash flow.
- Equity Linked Savings Scheme (ELSS)
- Market-linked mutual funds with tax benefits.
- Expected returns 10%-12%.
- Lock-in period of 3 years.
- Miscellaneous Plans
- Sukanya Samriddhi Yojana: Savings for girl child with 8.2% interest.
- Employees Provident Fund (EPF) and Voluntary Provident Fund (VPF): Retirement saving schemes with approx. 8.25% returns.
- Money Back Plans and Endowment Plans: Insurance with savings and periodic payouts.
Benefits
- Tax benefits under Section 80C of Income Tax Act (up to ₹1.5 lakh deduction in many schemes).
- Guaranteed returns on government-backed savings schemes.
- Options suitable for different risk appetites—safe fixed income to market-linked higher returns.
- Liquidity varies—some plans have lock-in periods, others offer periodic withdrawals.
How to Choose
- Assess your financial goals, risk tolerance, and investment horizon.
- Government schemes offer safety and assured returns.
- Market-linked plans like ULIPs and ELSS offer potential for higher returns but with risk.
- Senior citizens can opt for high-interest, steady-income plans like SCSS.
These plans provide a range of options for disciplined saving with various returns, tax benefits, and safety features to match diverse financial needs.