Post Office Schemes - compared and reviewed

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Post Office Schemes - compared and reviewed

Postby admin » Tue Feb 01, 2011 1:42 am

5-Year Post Office Recurring Deposit Account: It is an account where you deposit equal amount of money every month. Interest rate is 7.5% quarterly compounded, which approximately equals 7.7% p.a. Upto half the accumulated amount can be withdrawn after one year. Rupee 1 invested every month becomes Rs. 72.8 after 5 years.

Post Office Time Deposits: If 5 year period seems too long, and if you wish to invest in a lump sum, a time deposit account may be considered. You can opt for 1 year, 2 year, 3 year or 5 year deposit. Rate varies from 6.25% to 7.5%, depending on the number of years. Premature withdrawals are allowed, but the deposit cannot be withdrawn partially. If you withdraw within 6 months, you will not earn any interest. Time deposits qualify for section 80 rebate.

Monthly Income Scheme: Very popular of the elderly, it gives a monthly income of 8%. The scheme runs for 6 years. Premature withdrawals are allowed with a small penalty (1-3% less interest rate). But if the deposit is left intact for 6 years, 5% bonus is awarded.

15 year Public Provident Fund: Hated the most for its long term nature and poor liquidity. But deposits qualify for section 80 rebate of income tax. Interest is 100% tax-free. Withdrawal is allowed every year, from 7th financial year. Loan facility available from 3rd financial year. Interest rate is 8% compounded annually.

Kisan Vikas Patra: Money doubles in 8 years and 7 months - giving an interest rate of 8.4% compounded yearly. Early withdrawals allowed, and there is no limit on investment.

National Savings Certificate: Money becomes 1.6 times after 6 years - giving a rate of 8.16%. Both deposits and yearly interest amount qualify for section 80 rebate of income tax.

Re: Post Office Schemes - compared and reviewed

Postby Medhap » Sat Oct 01, 2011 12:24 am

:) Nice topic ! let me add what I think n know.

1) Post Office MIC scheme is nice one but has maxi.limit of 3Lacs per person i.e.if it is in the first name amt.is fully counted and if the person's name appears second, half amt.is counted for the purpose.

2) NSC scheme is well-known and favourite of elderly as well as professionals/salaried ppl. who wish to have tax rebate. Maxi.limit presently is 1Lac.and after six yrs. if u don't have time to attend post office, you will have to give authority letter to agent along-with signed NSCs with instructions in whose favour u want chq.(i.e.first name or second name)..Here agent puts his family member's/friend's name on authority letter as these days agents are not permitted to do this work, so as if you know his friend/family member u give authority letter. Hope this makes sense. I am happy with NSC scheme and agent's handling too.

3) For PPF withdrawals mentioned in topic are allowed half the total balance accumulated after 7 yrs.(check it). Min.1000/-rs.per fin.yr.is must, if u forget to pay till 31st March, rs.50/100 penalty is to be paid along-with 1,000/rs.4) Recurring scheme is unpopular due to long ques at post office for payment of installments, of-course agents can do it for you, but then if same window handles savings a/c you will need to tell agent specifically that he has to withdraw your money or update your passbook from time to time. Thanks for reading my opinions.


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