FD vs Small Savings Schemes: Where will maximum returns be provided for investment?
Investing wisely can ensure or spoil your financial future. Fixed Deposits or Small Savings Schemes- Which one to choose?
The answer depends on interest rates benefits and liquidity. Let us break it down for you.
The pertain interest rates- Who Offers Higher?
Interest is a function based on time that determines how fast your money grows. Here is how FD fares against Small Savings Schemes:
1. FD Interest: 6.7% – 7% per annum
2.
P.P.F.: 7.10% per annum
3. S.C.S.S.: 8.20% per annum
4. Sukanya Samriddhi Scheme: 8.20% per annum
5. N.S.C.: 7.7% per annum
6. K.V.P.: 7.5% per annum
Judgment: In small ways interesting schemes, the small saving scheme wins over an FD; hence, they are better for long-term investors.
Tax-Related: How Much Will You Lose?
When income tax is a concern, FDs may not be the best option, and here are the reasons:
1. 30% Tax Bracket? One-third of your FD interests get lost in taxation.
2. 20% Tax Bracket?
One-fifth of your FD earnings get lost.
3. PPF and SSY: 100 percent tax-free returns. No tax on the interest earned.
4. NSC and SCSS: Tax-saving benefits under 80C.
Judgment: In case you’re in a higher tax bracket, choose Small Savings Schemes.
Liquidity: Is Money in Your Reach?
1. FDs: Any time, with a penalty for early withdrawal.
2. P.P.F. & S.S.Y.: Long-term lock-in; withdrawals are allowed in limited cases.
3. SCSS and NSC: Fixed lock-in, but they provide more liquidity than PPF.
Judgment: FDs are the winner if you require flexibility. Small Savings Schemes will have a place for long-term growth.
FD vs Small Savings Schemes: Which Way You Go?
1. Fixed Deposits for flexibility and short-term security.
2. Small Savings Schemes for higher rates and tax-free returns.
Ultimate Verdict: Fit for You
Small Savings Charges merit FDs where tax savings and high return are the factors. If it is an easy withdrawal that matters, FDs come ahead in this duel.
Pro Tip: Keep a mix of both investments for better returns and liquidity!
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