Why should you invest in the Post Office monthly income scheme?

TomorrowMakers ™

Why should you invest in the Post Office monthly income scheme?

23 May 2017
A government-backed low-risk investment that offers a monthly income; here’s why POMIS could be just right for you.
 
 

Writing letters or buying postcards and stamps may not be as popular as they once were. But that doesn’t mean the post office’s value has diminished. It offers many other services now. For instance, did you know you could invest your money in a post office scheme? 

 

What is POMIS? 

The Post Office Monthly Income Scheme (POMIS) is a mid-term savings plan, which can help you earn consistent returns. 

It is an income scheme offered by the Indian postal service, which offers guaranteed returns to investors. Opening an account under this scheme can ensure you enjoy regular interest payments every month. As of May 2017, the interest rate offered on this scheme is 7.6% per annum. In comparison to this, the current interest rate offered by the State Bank of India (SBI) for a mid-term fixed deposit is around 6.9% per annum. The minimum deposit you can make in this scheme is Sugeet Sugeet will earn a monthly income of Sugeet has another option to make the most of the monthly interest the investment earns. He could link his POMIS account with a recurring deposit (RD) or mutual fund SIP, which will allow him to reinvest that amount. This can ultimately help him increase his investments in a better way.

The POMIS allows you to withdraw your investment before completion of the tenure. However, this involves a penalty. Withdrawing the amount between one and three years results in a 2% deduction on the deposit amount, while after three years there is a 1% penalty deduction on the amount. 

 

Documents needed for opening POMIS 

  • Address proof- Aadhaar Card, Passport, Voter ID or Utility bills 

  • Identity proof- PAN Card, Passbook, Aadhar Card, Passport 

  • Passport size photographs 

 

Who should invest in this scheme? 

This scheme is best suited for risk-averse investors, especially those who are not comfortable with equity instruments. It is also a suitable option for senior citizens and retirees, as it allows them to earn a regular income.  

However, a major drawback of investing in POMIS is that the amount does not offer any tax rebate. And while your investment is not subjected to TDS (Tax Deduction at Source), interest earned on the amount is taxable.  

The bottom line 

Assess your main priorities; if the safety of your capital and regular returns is important to you, the POMIS is a savings option you should consider. 

Disclaimer: This article is intended for general information purposes only and should not be construed as investment, insurance, tax or legal advice. You are encouraged to separately obtain independent advice when making decisions in these areas.

Topic:
 

Do you know how much industries contribute to the Indian GDP

POLL

 

MOST VIEWED CONTENT

What is National Pension System and how it works

What is National Pension System and how it works

Building a sizeable retirement corpus is an important aspect of financial planning. Simply because it will not only take care of your expenses in golden years, but also help you sail your life post retirement without any ups and downs.

5 Indian cities that are great for retiring in

5 Indian cities that are great for retiring in

Just like some cities are great for employment, others are ideal for retirement. Here are some of India’s best cities where you can spend your golden years.

Types of pension plans and their tax benefits

Types of pension plans and their tax benefits

Before you purchase a Pension Plan, it’s essential you know how they work, as well as the tax benefits they offer.

Five Retirement Planning Blunders to Avoid

Five Retirement Planning Blunders to Avoid

You may be a couple of years or decades away from your retirement, but it's imperative to plan and save for retirement, much in advance. Planning for retirement may seem an arduous task, but if done properly, will make your retirement stress-free and enjoyable!

Best countries to retire in and why

Best countries to retire in and why

Looking for a good country to retire abroad? Try the ‘lesser’ Americas

Your tax-free gratuity could double if this new amendment is passed

Your tax-free gratuity could double if this new amendment is passed

A new amendment on the Payment of Gratuity Bill could see an increase of tax free gratuity to Rs. 20 lakh, which would prove a huge benefit for private and public employees.

Is your child your retirement plan?

Is your child your retirement plan?

We all want to save for our children’s future- but should it be at the cost of our own?

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER