In today’s world, securing a safe future has become a priority for everyone. Some try their luck in the stock market, while others prefer mutual funds or bank fixed deposits. However, there are also a large number of investors who prefer to avoid risk and rely only on safe and reliable options. For such people, the Post Office small savings schemes remain a strong support.
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Among these popular Post Office schemes, the National Savings Certificate (NSC) stands out. This scheme is specifically designed for investors who want a fixed return while avoiding market fluctuations.
What is the National Savings Certificate Scheme?
The National Savings Certificate is a government-backed small savings scheme run by the Post Office. Investors receive returns at a fixed interest rate, and the entire amount is secure under a government guarantee. The special feature of this scheme is that investment can be started with just Rs. 1,000, making it easily accessible to the common man.
There is no maximum limit for investment in this scheme. Investors can purchase one or more NSC certificates according to their capacity. This is why this scheme is quite popular among salaried individuals, the middle class, and those looking to build a secure fund for the future.
NSC Lock-in Period and Interest Rate
The Post Office NSC scheme has a lock-in period of 5 years. The invested amount cannot be withdrawn during this period, which helps maintain discipline among investors. Currently, this scheme offers an annual interest rate of 7.7 percent, which is compounded annually.
The interest is added to the account every year, but the payment is made only upon maturity. After five years, the investor receives the principal amount along with the entire interest in a lump sum.
How to build a large fund
The NSC scheme benefits from compounding, which allows the investment amount to grow rapidly over time. If an investor invests regularly and for a long period in this scheme, a substantial fund can be created solely through the power of compounding interest. This scheme is particularly beneficial for those who want to save a secure amount for future needs such as children’s education, marriage, or retirement. However, the full benefits are realized only when the investor completes the five-year tenure.
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Why do investors still trust NSC?
Even today, when many high-risk investment options are available in the market, NSC continues to enjoy the trust of investors due to its simplicity, security, and guaranteed returns. It is unaffected by market fluctuations, and the investor knows in advance how much they will receive at maturity.
Government guarantee, low minimum investment, and a fixed interest rate make it a reliable option for risk-averse investors.