Saving money is one of the fundamental principles of financial planning. Everyone wants to secure their financial future, and saving is the first step towards achieving that goal. However, saving money is easier said than done, especially when there are so many expenses to take care of. That’s where monthly saving schemes come in.
Monthly saving schemes are a great way to save money regularly, without having to worry about forgetting or missing any payments. These schemes are designed to make saving effortless and convenient, ensuring that you have a sizeable sum of money saved up over time. In this article, we’ll explore everything you need to know about monthly saving schemes and how they can help you plan your finances better.
Table of Contents
1. Introduction
Saving money is an essential part of financial planning. Whether you are saving up for a specific goal or building an emergency fund, having a regular savings plan can help you achieve your financial objectives. Monthly saving schemes are an excellent way to save money regularly, without having to worry about missing any payments or forgetting to make a deposit.
2. What are Monthly Saving Schemes?
Monthly saving schemes are financial instruments that allow you to save money on a regular basis, typically every month. These schemes are designed to make saving money easy and convenient, as you can set up an automatic transfer of funds from your bank account to the savings scheme account. Monthly saving schemes are offered by banks, post offices, and other financial institutions, and they typically offer higher interest rates than regular savings accounts.
3. Types of Monthly Saving Schemes
There are several types of monthly saving schemes that you can choose from, depending on your financial goals and risk appetite. Let’s take a look at some of the most popular monthly saving schemes in India:
Fixed Deposit Schemes
Fixed deposit schemes are one of the most popular monthly saving schemes in India. In a fixed deposit scheme, you deposit a lump sum amount for a fixed period, ranging from a few months to several years. The interest rate offered on fixed deposit schemes is generally higher than regular savings accounts, and you can choose to reinvest the interest earned or withdraw it periodically.
Recurring Deposit Schemes
Recurring deposit schemes are another popular type of monthly saving scheme. In a recurring deposit scheme, you deposit a fixed amount of money every month for a fixed period, typically ranging from 6 months to 10 years. The interest rate offered on recurring deposit schemes is generally higher than regular savings accounts, and you can choose to reinvest the interest earned or withdraw it periodically.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a long-term investment scheme offered by the Indian government that provides a safe and secure way to save for the future. It offers tax benefits, a fixed rate of interest, and the flexibility to choose the investment amount and frequency. The minimum investment amount is Rs. 500 per year, and the maximum investment amount is Rs. 1.5 lakh per year. The maturity period of PPF is 15 years, and it can be extended for another 5 years. The interest rate is revised every quarter and is currently at 7.1% per annum. PPF is a popular investment option for individuals looking for a low-risk and high-return investment scheme.
National Savings Certificate (NSC)
National Savings Certificate (NSC) is a savings scheme offered by the Indian government that is designed to encourage small savings among individuals. In an NSC account, you can invest a minimum of Rs. 100 and in multiples of Rs. 100 thereafter, and the interest rate offered is fixed and revised every quarter. The interest earned on NSC is taxable, but you can claim tax deductions on the amount invested under Section 80C.
Sukanya Samriddhi Yojana (SSY)
Sukanya Samriddhi Yojana (SSY) is a savings scheme that is designed exclusively for the girl child. In an SSY account, you can invest up to Rs. 1.5 lakhs per year, and the amount deposited is eligible for tax deductions under Section 80C. The interest rate offered on SSY is higher than most other savings schemes, and the account matures after the girl child reaches the age of 21.
4. Advantages of Monthly Saving Schemes
Monthly saving schemes offer several advantages over regular savings accounts. Let’s take a look at some of the key advantages of monthly saving schemes:
Easy to Start
Monthly saving schemes are easy to start, and you can set up an automatic transfer of funds from your bank account to the savings scheme account. This makes it convenient for you to save money regularly without having to worry about missing any payments.
Flexible Options
There are several types of monthly saving schemes to choose from, depending on your financial goals and risk appetite. You can choose a fixed deposit scheme if you have a lump sum amount to invest, or a recurring deposit scheme if you want to save a fixed amount of money every month.
High Returns
Monthly saving schemes offer higher interest rates than regular savings accounts, which means that you can earn more money on your savings. This can help you achieve your financial goals faster and build a sizeable corpus over time.
Tax Benefits
Most monthly saving schemes offer tax benefits, which means that you can claim deductions on the amount invested under Section 80C of the Income Tax Act. This can help you save money on your taxes and increase your take-home pay.
Encourages Financial Discipline
Monthly saving schemes encourage financial discipline, as you have to save money regularly and cannot withdraw the funds before the maturity date. This can help you build a habit of saving and improve your financial health over time.
5. Things to Consider Before Choosing a Monthly Saving Scheme
Before choosing a monthly saving scheme, there are several factors that you should consider. Let’s take a look at some of the key factors that you should keep in mind:
Investment Amount
The investment amount is one of the most crucial factors to consider when choosing a monthly saving scheme. You should choose a scheme that allows you to invest an amount that you are comfortable with and can afford.
Lock-In Period
The lock-in period is the period during which you cannot withdraw the funds from the savings scheme. You should choose a scheme with a lock-in period that suits your financial goals and needs.
Interest Rates
The interest rate offered on the savings scheme is another crucial factor to consider. You should choose a scheme that offers a competitive interest rate that can help you earn more money on your savings.
Tax Benefits
You should also consider the tax benefits offered by the savings scheme. You should choose a scheme that offers tax deductions under Section 80C of the Income Tax Act, as this can help you save money on your taxes.
6. How to Open a Monthly Saving Scheme Account
Opening a monthly saving scheme account is a straightforward process. Here are the steps that you need to follow:
- Choose the savings scheme that suits your financial goals and needs.
- Gather the required documents, such as your identity proof, address proof, and PAN card.
- Visit the bank or financial institution where you want to open the account.
- Fill in the application form for the savings scheme.
- Submit the required documents along with the application form.
- Make the initial deposit, as required by the scheme.
- Once the account is opened, set up an automatic transfer of funds from your bank account to the savings scheme account.
7. Conclusion
Monthly saving schemes are an excellent way to save money regularly and earn high returns on your savings. There are several types of monthly saving schemes to choose from, depending on your financial goals and needs. Before choosing a scheme, you should consider factors such as the investment amount, lock-in period, interest rates, and tax benefits. By choosing the right monthly saving scheme, you can achieve your financial goals faster and improve your financial health over time.
FAQs
What is a monthly saving scheme?
A monthly saving scheme is a type of savings scheme that allows you to save money regularly and earn high returns on your savings.
What are the types of monthly saving schemes?
The types of monthly saving schemes include fixed deposits, recurring deposits, Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY).
What are the advantages of monthly saving schemes?
The advantages of monthly saving schemes include easy to start, flexible options, high returns, tax benefits, and encourages financial discipline.
What factors should I consider before choosing a monthly saving scheme?
You should consider factors such as the investment amount, lock-in period, interest rates, and tax benefits before choosing a monthly saving scheme.
How do I open a monthly saving scheme account?
To open a monthly saving scheme account, you need to choose the savings scheme that suits your financial goals and needs, gather the required documents, fill in the application form, submit the required documents, make the initial deposit, and set up an automatic transfer of funds from your bank account to the savings scheme account.