Post Office Investments – Safe & Secure!
In today’s volatile financial scenario, this government organization is a safe bet for investors of all ages.
Investing excess funds in various instruments is considered good practice. The financial market has a lot of options when it comes to investments and one must make a choice based on factors that affect their financial goals.
Investment alternatives can be classified on the basis of risk, tenure and amount to be invested. Any investment product that carries high risk, gives high returns. Traditional securities are considered more trustworthy in terms of risk and assurance. The government of India-backed securities are one of the safest options for the common investor. The government of India offers investment products through its widespread network India Post Service.
Why Postal investment schemes?
Investors can choose from mutual funds, corporate fixed deposits, Unit linked insurance plans, fixed deposits, and Gold. Postal investments are low-risk as these investments are guaranteed by the central Government. Naturally, the rate of returns is much lower than what one can expect in mutual funds or the stock market. What makes it desirable is an element of certainty.
How to invest?
Opening a savings account in a post office is the first step of investing. This is a crucial step as this account is where you’ll receive the returns on your investment. Basic details like name, address, and age will be required at this stage, and Know Your Customer (KYC) documents will have to submitted.
Postal investment options can be classified into three categories.
– Provident fund Investments.
– Special schemes.
The deposits offered by the Post office are similar to the ones we see in banks. They may offer some special deposit schemes in the form of a National Saving Certificate and Kisan Vikas Patra. You also have the option to open a Provident Fund account. Recently, the government has launched the Sukanya Samriddhi Yojana. This unique scheme is designed for the girl child and is a great way to save and generate capital appreciation for the long run.
Why Post Office investments are important?
The financial sector has been rather volatile in recent times. The Covid – 19 pandemic has caused a widespread economical upheaval. Though mutual funds and the stock market offer better returns, the risk is also high. For a new investor, the security and stability of an investment instrument are crucial. Volatile stock markets have created uncertainty in terms of expected gains on Mutual Funds. Corporate Fixed deposits have also become risky with the recent uncertainties in interest rates. In such a situation, Post Office investments carry government backing and are comparatively secure.
Your investment portfolio and Post Office Schemes
Your financial portfolio has to be a reflection of your income, risk appetite, and most importantly your age. If you are over 60 and have enough pension to manage your monthly expenses, then Kisan Vikas Patra (KVP), National Saving Certificate (NSC), Monthly Income Scheme (MIs), or Senior Citizen Saving Scheme could be some good options for you.
The notion that Post Office investments are only for senior citizens is a complete myth. There are plenty of options for young investors too. For eg: A new parent to a baby girl could invest in the Sukanya Samriddhi scheme to plan her future. Ideally, your fixed-income investment should increase with an increase in age. If you have crossed 50 years, you can increase your investment in Post Office schemes to provide for your retirement. These funds could be further invested in a way that you receive a monthly income after retirement.
In short, there is a good Post Office scheme for everyone, you just have to find the right one.- Koustubh Joshi
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