Government Investment Schemes help tackle One of the biggest fears for the majority of investors, i.e. losing money to market volatility. Although market-linked securities reward investors for the risk taken, not everyone has a high appetite for risk. Some prefer growing their money safely and steadily. For this category of investors, one of the safer investment options is government securities. Government securities are low-risk investments that offer steady returns. Read to learn about the different types of government securities available for Indians.
Best Government Investment Schemes: In Detail
Public Provident Fund (PPF)
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A Public Provident Fund (PPF) is a long-term savings and investment scheme. It was first introduced in 1968 to mobilize small savings and encourage investing. It is a perfect investment avenue for long-term goals such as retirement due to its long duration.
PPF is a fixed-income scheme that pays a guaranteed interest to investors. The Ministry of Finance decides the interest rate of the PPF scheme every quarter. For the April-June 2023 quarter, the interest rate of the PPF scheme is 7.1% per annum.
You can open a PPF account at any authorized bank with a minimum investment of Rs 500 per annum. The maximum investment amount is Rs 1.5 lakhs per annum. The tenure of the PPF scheme is 15 years and can be extended in blocks of five years as per your wish. As per the scheme rule, you must invest at least once every year for 15 years, or else the account will become inactive. You can invest in lumpsum or in instalments throughout the year. Ideally, it is best to invest before the 5th of every month to get interested for the entire month.
National Savings Certificate (NSC)
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National Savings Certificate is a fixed-income investment scheme to encourage savings among small and middle-income investors. You can invest in NSC through any post office or an authorized bank with a minimum investment of Rs 1,000. The scheme doesn’t have any maximum investment limit.
Only Indian citizens can invest in the scheme individually, jointly or on behalf of a minor for a tenure of five years. NRIs, HUF, and private and public limited companies cannot invest in NSC. Investing in NSC requires identity proof such as PAN Card, Aadhar Card, Voter ID, Driving License, and Passport. You will also need address proof such as Aadhar Card, Passport, Utility Bills, or bank statement.
Sukanya Samriddhi Yojana (SSY)
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Sukanya Samriddhi Yojana is a government scheme aimed at improving the life of a girl child. It was launched in 2015, promoting the Beti Bachao Beti Padhao (BBBP) campaign. It is run jointly by the Ministry of Women and Child Development, the Ministry of Human Resource Development, and the Ministry of Health and Family Welfare.
The primary aim of the scheme is to ensure the protection and survival of girls, encourage girl child education, and reduce sexual and gender discrimination against children. Parents of a girl child can open an SSY account at any bank or post office provided the girl child is below ten years. Only one account per girl child and a maximum of 2 SSY accounts per family is allowed.
National Pension Scheme (NPS)
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National Pension Scheme is a retirement pension scheme introduced by the Government of India to promote long-term savings and provide retirement benefits. PFRDA (Pension Fund Regulatory and Development Authority) regulates the scheme.
Under NPS, subscribers contribute a pension every year until the age of 60 and can enjoy regular pensions for a lifetime starting from the time they retire. All Indian citizens, including NRIs between the age of 18 and 60, can join the NPS. NRI accounts will be closed if they change their citizenship.
To invest in NPS, you must approach an entity which is the Point of Presence (POP). All banks, private and public, are authorized POPs. To find POPs near you, you can visit the PFRDA website. To open an NPS account, you will need to submit an NPS application form along with proof of identity, residence, and date of birth. For proof of identity PAN Card, Aadhar Card, or Passport can be used. For proof of address, a Passport and Aadhar can be used, and for proof of date of birth, you can use your birth certificate.
Sovereign Gold Bonds (SGB)
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Sovereign Gold Bonds are government securities that are an alternative to physical gold. Their value is denominated in grams of gold. Owing to the widespread popularity of gold, the government introduced them in November 2015, and the Reserve Bank of India (RBI) issued them.
When you invest in SGBs, you are buying gold digitally. Buying gold digitally has several benefits. For example, you need not worry about storage or theft. The bonds represent physical gold of the highest purity, and hence you need not worry about the quality. These bonds trade at the market value of gold, and hence you can receive the market value of gold at the time of redemption.
Senior Citizen Savings Scheme (SCSS)
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Senior Citizen Savings Scheme is a savings scheme for senior citizens that pays regular interest to subscribers. The primary aim of the scheme is to ensure a regular source of income for senior citizens. In this scheme, senior citizens can invest a lumpsum amount, either individually or jointly and get regular income in the form of interest payments.
SCSS account can be opened in any of the authorized banks or the post office with a minimum investment of Rs 1,000 and a maximum investment of Rs 30 lakhs. You can either open an individual account or a joint account provided you and the second account holder are 60 years and above. The scheme allows you to open multiple SCSS accounts, provided the total investment across all accounts doesn’t cross Rs 30 lakhs.
To invest in the SCSS scheme, you either need to be 60 years or above or a retired civilian aged above 55 and below 60, and the investment is made within one month from retirement. Retired defence employees above 50 and below 60 also can invest in the scheme if the investment is made within one month of retirement.
Atal Pension Yojana
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Atal Pension Yojana is a guaranteed pension scheme designed for the unorganized sector. The scheme is regulated by Pension Fund Regulatory and Development Authority (PFRDA). All citizens aged 18-40 years can subscribe to this scheme and get a guaranteed pension at the age of 60.
It pays a minimum pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000, or Rs 5,000 monthly, depending on the contribution. The minimum contribution is Rs 42 and can go up to a maximum of Rs 1500 a month, varying based on the age of the contributor. You can contribute monthly, quarterly, and half-yearly through the auto debit facility.
To open an Atal Pension Yojana account, you need to be a citizen of India. You would need a savings bank account in a bank or a post office. Additionally, you would need proof of identity, such as a PAN card and Passport and proof of address, such as an Aadhar card. You can only open one Atal Pension Yojana account, and it is mandatory to appoint a nominee for the account.
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