Sunday, August 25, 2013

Flexible Savings

To be frank, have always been a little scared of saving or recurring deposit schemes which expect  you to pay fixed money for a fixed period. It would also be difficult in closing or withdrawing from those schemes with some making you pay penalty as well. That is why i have one of the least possible life insurance policies. infact i discarded a second policy after paying the first premium in the fear of not paying the future fixed premiums. In these times have come the below three options that have given me hope. The beauty is all three could be managed online, what else will a so called IT guy ask for. (Note: Fourth option of NPS added later)

1. Flexible gold savings: One year back started  with a online savings scheme with Tanishq. it is an 18 month plan where you pay a flexible amount every month online and on completion, Tanishq will give you a bonus which i expect would approx be atleast 6% and you buy for the accumulated total sum with Tanishq at store. The sad part is this scheme is not available anymore but only the 11 month fixed payment scheme where 12th payment is borne by Tanishq. So i had some luck then.

2. Iwish : This is a flexible recurring deposit scheme by ICICI and is available for all ICICI account holders. Ofcourse payment amount is flexible and you are not penalized for missing a month. All maintenance online on your ICICI account that includes opening and closing of the recurring deposit. Am banking on this so much that I hope and wish this will continue for my lifetime with ICICI. Would be great if this spreads to all possible banks.

3. PPF (Public Provident Fund): Ok, this is a retirement planning option, provided by nationalised banks and ICICI, SBI and also ofcourse post office. It would be my savior alternate for the low insurance i have. Since ICICI allows online maintenance with very less paper work for opening it, am looking forward to it as i have just submitted all the docs with the ICICI branch. You can pay as low as Rs 500 for a whole year and as max as 1L per year. Interest compounded annually. It has loan and withdrawal options starting after 3rd year. Maturity on 15 years and option to continue after that as well. Its a EEE scheme which means the Principal, Interest and maturity all exempted from tax where the principal exemption though depends on your 80C limit..

Let me know of other options if any available online or not.

Update 29-9-2013: Successfully using my PPF thru ICICI online. My wife wants to open one for herself as well now. Also, heard from a colleague that SBI also provides online maintenance of PPF.

Update: 22-10-2013:
4. NPS (New Pension Scheme) : Was aware of this earlier through icici  demat account online but got the understanding only now. Under this you can do savings thru two types of accounts (Tier 1 and Tier 2) for future pension. While non-withdrawable Tier I account is mandatory for opening of an NPS account, opening of Tier II account is optional based on your requirements. However, an active Tier I account is a pre-requisite for opening a Tier II account.
Minimum of Rs. 6000 required per year for Tier 1 and Rs. 2000 for Tier 2. Savings under Tier 2 can be withdrawn any time. Most important to note is that you can choose to invest the money in your NPS the way you want in the available 3 options as mentioned below, that too with your choosen fund manager (SBI, ICICI...etc) for better returns
Asset Class E - investments in predominantly equity market instruments. --Max 50%
Asset Class C- investments in fixed income instruments other than Government securities.- Max 100%
Asset Class G - investments in Government securities.- Max 100%
You can also select Auto Choice Investment instead where the distribution is done based on your age.
Though the returns has been good so far (>10%), there is no guarantee on the returns on maturity.
Upon attainment of the age of 60 years at least 40% of the accumulated pension wealth needs to be utilized for purchase of annuity. ICICI demat online helps you open it online. But there are also attached charges and penalties as needed with NPS in general. Tax deduction under 80CCD available
For more details :

This post is only to help and give an idea about available saving options in India. Make sure to carefully verify the options before using them yourself. I wouldnt be liable or responsible whatsoever for any kind of loss or impact or effect...etc due to the usage of this blog post.

No comments: