Post Office Savings Schemes are very popular in small towns though these schemes have lost relevance in big cities. I remember “National Savings Certificate” popularly known as NSC was most preferred investment avenue for my parent’s generation. During those days not many financial instruments were available for investment cum Tax Savings. Secondly, the biggest plus point for Post office Savings Schemes is trust factor because of Govt of India backing.
Despite have some of the Best Financial Products in the portfolio, it is not recommended to invest in Post Office Savings Schemes…Let’s find out why
1. Post Office Savings Schemes are linked to Place of Investment:
Concept is similar to Home Branch concept of Banks. Assume that you invested in one of Post Office Savings Schemes say Monthly Recurring Deposit in Worli Post office. Now, you can operate your account only through Worli Post Office. In case you shift from Worli to Chembur then you need to get your account transferred from Worli to Chembur Post Office. It’s a manual activity and might take months or in some cases years. Reason every Post Office has deposit targets and it is not in the interest of Post Office to transfer deposit account. In case, you shift from Mumbai to any other city then it will be nightmare to shift your Post Office Savings Schemes from Mumbai to another city.
2.Post Office Savings Schemes are like Currency Notes:
Though Post Office Savings Schemes like NSC or Kisan Vikas Patra carry name of the investor but in case Post Office Savings Schemes certificate is lost, stolen or damaged then investor need to run from pillar to post to claim his/her investment that too without much success. If your investment documents are stolen specially NSC or Kisan Vikas Patra then anyone with little brains can withdraw your investment easily.
3.Post Office Savings Schemes are notdigitized:
Unlike other investment avenues like Mutual Funds, Equity, Gold etc it is not possible to operate your Post Office Savings Schemes account online i.e. you cannot track your account or invest online. You always need to keep your passbook updated all the time by standing in post office queues for hours. In this internet age no one prefer Stone Age mode of operation.
4.Unfriendly Post office Staff:
No offence to anyone but in my opinion, Post Office staff is very unfriendly. They treat their customers as if they are doing some big favor to customer. Despite being PSU State Bank of India and Bank of Baroda has done a commendable job in this regard. Post Office staff should be trained to be more customer friendly and professional in their approach.
5.Post Office Agents Rule the Roost:
If you have ever visited Post Office then you can co-relate what i am trying to convey. When i visited one of Post Office in Mumbai to open RD account, 5-6 agents Gheraoed me. Somehow I reached RD counter and to my surprise Post Office employee suggested me to open the RD account through Post Office agent. Post Office agents receive commission for all Post Office Savings Schemes opened through them. Food for thought is why Post Office employee is suggesting to open a deposit account though agent, We really need strong LokPal Bill.
Recently Department of Post applied for Banking License and i strongly feel that they should get Banking License because of widest reach and employee strength but before that mindset change is required. Post Office Savings Schemes are not only for a “Poor Man” but for every resident of India.
FAQs
Advantages and disadvantages of post office schemes and mutual funds
| Investment | Advantages | Disadvantages |
|---|
| Post Office Schemes | Safe and secure, backed by the government, fixed returns, tax benefits | Lower return potential compared to mutual funds, limited liquidity in some schemes |
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Post Office Saving Schemes are not entirely tax-free. While the interest income from some schemes is tax-exempt, the principal amount may offer tax benefits under Section 80C. Tax rules differ between schemes, so be aware of the specific tax implications when considering them.
Is it safe to invest money in a post office? ›
Is Post Office investment safe and tax-free? Ans. Yes, it is safe as investments under Post Office bear sovereign guarantee of Government of India. All these schemes are tax-exempt up to a certain limit and some schemes like PPF, Sukanya Samridhi Yojna have tax benefits on returns as well.
Is my money safe in a post office savings account? ›
The FSCS is funded by the financial services industry and is free to all consumers. So, you can be safe in the knowledge that your savings are protected.
Why is the post office losing so much money? ›
Postmaster General Louis DeJoy blamed the loss on inflation raising costs for its operations. It also sent printing prices surging, which significantly reduced the amount of junk mail marketers sent via the mail.
What is the best saving scheme in post office? ›
Post Office Saving Schemes
| Scheme | Interest Rate (Updated) |
|---|
| National Savings Time Deposit Account | 6.9% – 7.5% |
| National Savings Monthly Income Account | 7.4% p.a. payable monthly |
| Senior Citizen Savings Scheme Account | 8.2% p.a. (Compounded Annually) |
| Public Provident Fund Account (PPF) | 7.1% p.a. (Compounded Annually) |
5 more rowsPost office FDs may be the better choice for those prioritising higher interest rates and government-backed security. Conversely, investors looking for convenience, flexibility, and higher rates from competitive banks might find bank FDs more appealing.
Can NRI invest in post office schemes? ›
NRI's can invest in commercial or residential land but cannot own or invest in agricultural land or own any plantations. Post office schemes can also be invested in indirectly. The NRI has to open a joint account with a resident India to be eligible to invest in Post Office Schemes.
Which is better, FD or RD in post office? ›
In nutshell, Post Office FD is a better option when it comes to earn better returns, but the difference is while one need to make a lump sum investment in FD, an RD allows them to invest little amount monthly.
Which scheme is best in Post Office for senior citizens? ›
The Senior Citizen Savings Scheme (SCSS) now allows deposits up to Rs 30 lakh with a 5-year tenure, offering 8.2% interest rate, tax benefits, and secure investments. Individuals above 60 can open multiple accounts, get nomination facilities, and transfer accounts between banks and post offices.
Post Office Monthly Income Scheme (POMIS) offers steady and low-risk income along with other benefits like capital protection, tax efficiency, and reinvestment options. Eligibility criteria for opening an account are specified, along with the process for opening one.
How much money can you keep in Post Office? ›
The maximum overall limit for Post Office Savings Bank (POSB) Deposit Accounts is €250,000 per individual customer. For non-individuals, the maximum overall limit is €5,000,000.
Is it bad to keep more than $250,000 in one bank? ›
The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.
Can I transfer money from Post Office savings account to bank account? ›
Funds can be transferred using below options: From your POSB account to self or third party POSB accounts using the option Initiate Funds Transfer within DOP. From your POSB account to other bank accounts through NEFT or RTGS using the option Funds Transfer To Other Bank.
Where can I get 5% interest on my savings account? ›
Nationally Available High Interest Account Rates from Our Partners
| Account Name | APY (Annual Percentage Yield) Accurate as of 5/13/2024 |
|---|
| UFB Secure Savings | 5.25% |
| CIT Bank Platinum Savings | 5.00% (with $5,000 minimum balance) |
| Wealthfront Cash Account | 5.00% |
| Barclays Online Savings Account | 4.35% |
2 more rows5 days ago
Yes, post office time deposits are safe as they are backed by the government and offer fixed returns.
Which is better, post office or mutual fund? ›
Mutual Funds (MFs)
They offer higher returns compared to several other investment options, including PPF and Post Office savings. However, the lucrative returns are subject to market volatility and come with higher risk. One might end up losing their funds in case of a market crash or other unfavourable factors.
What is the monthly income scheme of the post office? ›
It is a low-risk MIS and generates a steady income. You can invest up to Rs. 9 lakh individually or Rs.15 lakh jointly, and the investment period is 5 years. Capital protection is its primary objective. The interest rate for April-June 2024 is 7.40% per annum, payable monthly.
What is the best scheme for senior citizens in post office? ›
The Senior Citizen Savings Scheme (SCSS) now allows deposits up to Rs 30 lakh with a 5-year tenure, offering 8.2% interest rate, tax benefits, and secure investments. Individuals above 60 can open multiple accounts, get nomination facilities, and transfer accounts between banks and post offices.
