As Diwali and the festive season approaches, the bonuses received by professionals in the corporate sector, including central and state government employees, bring a lump sum amount in their pockets. Often people spend this extra money on shopping or unnecessary expenses, whereas if this capital is invested in the right and safe financial instruments, it can create a huge fund for the future. For investors looking for 100% safe and guaranteed returns, away from the volatility of the stock market and mutual funds, small savings schemes from the Indian Post Office are the most reliable option. Being run by the Government of India, there is neither any fear of default nor the impact of market fluctuations in these schemes. In the current quarter, many post office schemes are offering excellent interest ranging from 7.1% to 7.7%, which has the power to increase your bonus money rapidly.
If you want to get maximum returns by locking your Diwali bonus in lump sum for the next 5 years, then National Savings Certificate (NSC VIII Issue) is the best option.
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Interest Rate: At present, interest is being given on this scheme at the rate of 7.7% per annum. In this, the interest is compounded on an annual basis, but the payment is made in one lump sum on the maturity of 5 years.
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input range: Investment can be started with a minimum of ₹1,000 and there is no limit on the maximum investment.
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tax benefit: Under Section 80C of the Income Tax Act, tax exemption is available on investments up to ₹ 1.5 lakh per financial year. Also, the interest earned every year is considered re-invested, due to which the scope of tax benefits remains on it also. This scheme is at the forefront to create a big fund in 5 years without any market risk.
Post Office Time Deposit Scheme is known for more secure and attractive rates as compared to Fixed Deposit (FD) of banks. Although there are options for 1, 2, 3 and 5 years, but 5 years time deposit is considered most suitable for Diwali bonus.
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Interest Rate: Interest of 7.5% per annum is available on time deposits with a tenure of 5 years. The specialty of this scheme is that the interest is calculated on a quarterly basis, which makes the actual returns even better, whereas the interest is paid into the account on an annual basis.
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input range: An account can be opened with a minimum of ₹1,000 and there is no limit on the maximum deposit.
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Tax Exemption: Tax deduction of up to ₹ 1.5 lakh is available under Section 80C on the amount deposited in a time deposit for 5 years. It is a balanced option for those looking for both secure returns and tax savings.
If your goal is to double your Diwali bonus without any complications, the post office's Kisan Vikas Patra (KVP) is the traditional and extremely popular formula.
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Interest Rate and Maturity: Annual compound interest of 7.5% is available on this scheme. As per the rules set by the government, at this interest rate your principal gets 100% doubled (2x) in exactly 115 months i.e. 9 years and 7 months.
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input range: The certificate can be purchased at any post office with a minimum of ₹1,000, there is no maximum limit.
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Lock-in and Security: It has a minimum lock-in period of 2 years 6 months (30 months), after which the facility of pre-mature withdrawal is also available if needed. Although it does not get the tax benefit of Section 80C, it is the easiest way to double your money for children's future or long-term goals like retirement.
Many people want that Diwali bonus should be invested in such a place that a fixed income starts every month for small monthly household expenses or any EMI. For this, Monthly Income Scheme (MIS) is most suitable.
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Interest Rate and Payment: Interest is paid on MIS at the rate of 7.4% per annum. The biggest feature is that instead of getting a lump sum, this interest is credited directly to your savings account every month.
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Tenure and investment range: The duration of the scheme is 5 years. Single account holders can deposit a maximum of ₹9 lakh, while if husband-wife or two-three people open a joint account, a maximum lump sum investment of up to ₹15 lakh can be made. If one invests the maximum bonus and savings in a joint account, he gets a guaranteed income of ₹ 9,250 every month for 5 years.
If your Diwali bonus is between ₹50,000 to ₹1.5 lakh and you want to build a secure, tax-free wealth for the next 15 years, then nothing better than Public Provident Fund (PPF).
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Interest Rate: Currently, interest on PPF is 7.1% per annum, which is compounded annually.
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Tremendous benefits of EEE status: PPF falls among the very few 'exempt-exempt-exempt' (EEE) category investment options in India. This means that the amount deposited (up to ₹1.5 lakh under Section 80C), the interest received every year and the entire maturity amount after 15 years is completely exempt from income tax. If an investor keeps depositing his bonus amount in the PPF account every year, then in 15 years, a tax-free fund worth crores of rupees is created on the basis of compound interest.
While investing money in these post office schemes, definitely examine your financial priorities. If you want immediate tax relief and maximum returns, NSC and 5-year time deposits should be the first choice. If you want extra income every month, choose MIS. If the idea is to double the money for children's higher education, marriage or for long term, then KVP and PPF are the most reliable tools. The account of these schemes can be opened in a few minutes by visiting any post office branch with just Aadhar card, PAN card and passport size photograph, or this investment can also be made directly online through the net banking portal of India Post. Amidst the festive cheer, this wise investment of bonus will keep your pocket healthy for many years to come.