Where to Invest? A Dilemma faced by Every Homemaker!

My mother always said, “Boond boond se sagar bharta hai” (Little droplets fill the ocean). For Indian homemakers, their savings are those little droplets. The Indian homemaker is apt at saving. In fact, to save is in our DNA. However, the dilemma comes as to where to invest and multiply our savings worth. Just keeping the money in the wardrobe tucked away in a corner won’t reap any benefits. It will only erode the value of money as inflation and other factors come into play. This article will provide you with certain avenues where you can invest your saved money, hassle-free.

The easiest modes of investment that offer a plethora of plans are

1) Banks

2) Post Offices

If you want to go a bit further ahead, you could also invest in Mutual Funds, Equity, etc. Let’s take you through them one by one.

Post Office

• Recurring Deposit: The tenure for such a deposit is up to 5 years. You can decide upon an amount starting from Rs. 100 and then deposit it every month to this account. For the average home-maker, this is the best and the easiest way of investing money. Since it is a monthly deposit scheme, you need not have a handsome amount at hand. You can take a decent amount which you aim to save every month and put it in this account. The interest rate is 5.8% with quarterly compounding. Therefore, if you are saving Rs. 1,000 per month for 5 years at this interest rate, your maturity value would be around Rs. 69,000.

• National Savings Certificate (NSC): The tenure for this instrument is 5 years, the rate of interest is 6.8%. You can purchase this as and when you want. There is no fixed instalments or anything. Each investment is treated as a separate investment and a certificate is issued for the same. So, if you invest Rs. 10,000 in this for 5 years, you will receive Rs. 13,895/- after 5 years. No tax will be deducted at the source.

• Kisan Vikas Patra: It is the same instrument as NSC except that the rate of interest is 6.9% and the duration is 10 years and 4 months. The amount invested will double in this tenure. So, if you have invested Rs. 10,000, you will get Rs. 20,000 on maturity.

• Sukanya Samriddhi Account: A new scheme by this name was launched by the Government of India specifically for the girl child. Rate of Interest is announced by the Govt. every year. The current rate of interest is 7.6% p.a. The maximum investment possible is Rs. 1,50,000 in a single year. However, once deposited you cannot take out the money before your daughter turns 18. Even at 18 years, partial withdrawal is allowed. Full maturity of this account is at 21 years.

Banks

To save your money in banks, you need to open a savings bank account. Once done, you can invest in Fixed Deposits of various tenure (currently the highest rate of interest that is being offered is 5.8% considering you are not a senior citizen), Recurring Deposit where you can deposit your monthly savings or Sukanya Samriddhi for your daughter. The only issue is, they are liable for a Tax deduction at Source (TDS) if the interest exceeds a specified limit of Rs. 40,000.

Mutual Fund, Equity

If you have a risk appetite, you may consider investing in these instruments. The investment in them is subject to market risk. Mutual Funds give you an option of SIP (monthly deposit of a fixed amount). So you can choose a fund and put in a fixed sum of rupees every month. A mutual fund having exposure to debt funds is relatively safer than equity funds but gives you a lesser value in return as well. Investing in equity is simply how the share market works. This form of investment needs a dedicated article but I would close here by saying that investment in these instruments is advisable only and only if you have some knowledge of how these work and are okay with losses.