small savings Archives – Vipin Khandelwal

Tax free, Guaranteed returns

July 12, 2016 by Vipin Khandelwal

“Sir, you invest Rs. 1 lakh per year for 10 years and after 20 years, you will get Rs. 20 lakhs guaranteed, tax free.”

Isn’t this going to get your mouth watering?

Well, the absolute number of Rs. 20 lakhs is quite a big number, that too guaranteed and tax free.

It is big enough to get you thinking and consider the investment. However, like a good investor, you would search for options.

What’s the alternative?

Let’s consider the Bank Fixed Deposit. A Bank FD is one of the safest investments with guaranteed returns.

If you invest the same Rs. 1 lakh every year for 10 years in a Bank Fixed Deposit at a 7 % rate of interest, what would you get?

The answer is Rs. 29.08 lakhs. But, the interest is taxable as per your tax bracket.

How Kisan Vikas Patra offers assured 12% returns?

March 30, 2016March 27, 2016 by Vipin Khandelwal

I was visiting the post office the other day to enquire about the Senior Citizens Savings Scheme.

The friendly person at the desk mentioned that since the rate is going to be revised lower from April 1, 2016 there has been a huge inflow recently into the scheme.

I agreed with him and said “Of course, everyone wants to lock in at the higher rate.”

“Not just that even Kisan Vikas Patra or KVP has witnessed a huge surge in investments, to the tune of several crores.”, he mentioned with a delight.

I was curious and asked why would that be? Kisan Vikas Patra was not even an option I considered for investments.

“Simple na, it doubles your investment in just 100 months. Who wouldn’t go for a thing that offers 12% assured returns.”

Now I was taken aback. 12% assured returns on Kisan Vikas Patra? This is not what I know? Or is this a new form of KVP that has been introduced.

Small savings rates – what REALly matters?

March 20, 2016 by Vipin Khandelwal

So, small savings rates across the spectrum have been cut including that of the ever popular PPF, Senior Citizens Savings Scheme and the Sukanya Samriddhi Yojana.

In fact, the rates will now be reset every quarter.

Here is the new rate structure applicable on Small Savings Instruments from April 1, 2016:

People are shocked and dismayed at this drastic cut.

Unfortunately, if you too are, then you are missing the real picture. To see this real picture, you would have to add another column to the above table, that of inflation rate.

Small Savings Schemes – Rates get further smaller

January 15, 2016 by Vipin Khandelwal

Why does bad news get more attention than good news? Not just that, it also triggers us into action.

I realised it yet again when my friend Vijay told me anxiously about a news he just heard.

“Did you read that the government is planning to reduce interest rates on small saving schemes?”

Small savings schemes include National Savings Certificates, Senior Citizen Savings Scheme, Post Office Monthly Income Scheme, PPF, etc.

“Yes, I heard that. But why are you bothered?” I said with my tongue-in-cheek.

“You know everything, yet you ask me that. Almost all my money is in these schemes, in fact most of it in Bank Fixed Deposits. Aren’t my returns going to suffer because of the reduction in interest rates?”