NPS, ELSS, EPF, FD, and more: 7 long-term investment schemes that can help you build large corpus and provide tax benefits
Investments in schemes such as NPS, EPF, ELSS mutual fund, and PPF can help one generate a sizeable corpusin the long run. These options also provide tax benefits under the old tax regime.
Financial Freedom With Tax Saving Benefits: Financial Freedom With Tax Saving Benefits: As India is celebrating its 78th Independence Day today (August 15, 2024) and Prime Minister Narendra Modi is envisioning Viksit Bharat 2047, it is very important that, as a responsible citizen, we also make ourselves financially free. For that, it is important that we start investing early in life so that in the long term, we become financially free. Financial freedom means we have a flow of income in our life in a way that we don't have to depend on our daily wages or monthly salary. The best way for it can be to invest in the right areas. Here are 7 investment schemes that can help you become financially free.
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National Pension System (NPS)
National Pension System is a retirement scheme that helps you build a sizeable retirement corpus if you start investing early. The scheme allows NPS subscribers to invest from the age of 18 till 75. At the age of 60, one can opt for withdrawal of lump sum and annuity purchase. Annuity investment provides you with a monthly pension. Lump sum withdrawals up to 60 per cent and 40 per cent annuity withdrawals are tax free.
Mutual fund investment
Mutual funds invest money in stock market-listed companies and debt. One can invest lump sum or through a systematic investment plan (SIP) in a mutual fund scheme. Starting early can help one build a considerable corpus by the age of 50. Mutual funds, such as Equity Linked Savings Scheme, provide tax benefits under Section 80C of the Income Tax Act, 1961.
Sovereign Gold Bonds (SGBs)
Investors who don't want to invest in physical gold can invest in SGBs. These are government securities denominated in grammes of gold. SGBs have an 8-year maturity period and provide 2.5 per cent annual interest paid twice a year. At maturity, they have the same value as physical gold. Investment in SGB provides tax benefits under Section 80C.
Employees' Provident Fund (EPF)
Private sector employees seeking a sizeable retirement corpus can opt for Employees' Provident Fund (EPF). Here, both the employee and the employer contribute to the EPF account of the employee. The scheme provides 8.25 per cent annual compound interest. Investments up to Rs 1.50 lakh in a financial year in EPF, the interest earned, and the maturity amount are tax free.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is also a guaranteed return scheme, which investors can use for their retirement planning. It provides 7.1 per cent interest and has a maturity period of 15 years. Investors can extend their PPF account for unlimited further blocks of 5 years. in PPF, investments up to Rs 1.50 lakh in a financial year, the interest earned and the maturity amount are tax free. In the long run, not only can it provide a large corpus, but it also provides guaranteed returns.
RBI Floating Rate Bonds
The government raises money by selling these bonds. They have a maturity period of 7 years and provide an 8.05 per cent interest rate. The interest earned is taxable, but investments provide tax benefits under Section 80C.
Fixed Deposits (FD)
FDs are guaranteed return schemes where investors can park their money and earn annual interest. Senior citizens get extra interest on FD schemes. Investments in the 5-year FD provide tax benefits under Section 80C.