1. National Saving Certificates is a scheme by government of India (Post Office Saving Scheme) which gives a interest by fixed interest rate on your investment (locked-in for 5 years). It is a guaranteed return, low risk scheme.
3. National Saving Certificates can be used as a collateral against loans in the banks, corporations, NBFCs.
4. Interest rates are fixed by government every quarter and are in rage of ~ 6.5-9%. Unlike PPF where interest rate changes, the interest rates in NSC remain fixed for 5 years and interest earned are re-invested i.e. your interest will compound annually. For example, say this quarter the interest rate is 7%, and you invested Rs 10,000 this month. It will become Rs 14,002.5 after 5 years. (7% compounded)
5. One needs a savings account in Post Office to avail this scheme. Also, one needs to physically go to nearest post office to avail this scheme.
6. Losing the certificate can create challenges for you. The process may be tedious to get your invested money back.
7. One can also invest in NSC for minor or as a joint account. NRIs, Trusts, Public and Private companies are not allowed to invest in this scheme.
8. As the invested money is locked-in for 5 years, one cannot withdraw the amount before 5 years. Except in-case of death (4 nominations allowed) and quitting the scheme (will be penalized).
9. Opinion : The government schemes are trustworthy and safe, though their customer service is not at par with private sector and one might face challenges if there are any grievances. It could bring frustration more worth than the interest earned. Only invest if you prioritize the trustworthiness and knows how to deal with the government employees.
10. One should also check other saving schemes of Post Office: Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), Kisan Vikas Patra (KVP), Senior Citizen Saving Scheme Accounts (SCSS), National Savings - Recurring Deposit (RD), Time Deposit (TD), Monthly Income Savings (MIS)
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