Why you should not invest in Post Office schemes? Reasons
Short Answer
One would not want to choose to invest in post office schemes because of its non-core banking services, non-digitalization of documents, the reduced interest rate advantage and lack of competitive advantage. Let's get details on the same.
Detailed Answer
Post office department has been the pillar of small savings in India. With a total investment base of about 6 lac crores, they are one of the biggest deposit mobilizers in Indian banking sector. While traditionally Post office schemes enjoyed huge popularity due to round the corner presence , local trust and the fact that they offered slightly higher returns than similar schemes from banks but they have not at all kept pace with improvements in banking services and customer facilities. Here are 5 reasons why I do not recommend investing in post office schemes
Non-Core Banking Service
Most of the post offices are still not on Core banking platform as a result whatever investments or savings you park with them stay with the local branch. For any changes, pre-mature withdrawals etc you need to go the branch where you opened the account or made the investments
Non-Digitization of Documents
NSC ( national saving certificates or KVP ( Kisan visas patra) etc all these investment documents are given in the physical form. In the case of theft or damage or lost of the physical document, Its not very easy getting records updated and in general who keeps all these physical documents.
Reducing Interest rates advantage
One of the traditional advantages of Post office schemes was they enjoyed higher spread and hence interest rates were 50 bps to 100 bps more than similar products from banks that gap has come down now
Unfriendly Staff
Post office staff is not the most friendly staff you will encounter around certainly something which needs massive makeover
Competitive advantage of schemes no longer exists
In my parents time there were limited financial products and as a result, some of the post office schemes were very popular for example if you wanted to save taxes Kisan Vikas Patra or the NSC were most important schemes .Now there are many more options available in the market both on debt and equity side. Also with increased distribution power of banks, they are distributing mutual funds and lot of other products as a result post office schemes no longer remain very attractive.
What Post Office Schemes for Boy Child are available? The Government of India has been on the forefront of giving schemes for the Girl Child in India. Are there any post office saving schemes for the boy child in India? I was looking at Ponmagan Podhuvaippu Nidhi Scheme but it seems that the scheme is available only in Tamil Nadu Post Office.
What are Best Government Saving Schemes in India? Government investment schemes are aimed to provide a reliable and safe way of investment with nominal returns. Grab list of best government schemes in India. There are many government schemes that you can invest in. However, the best amongst them are PPF, NPS, and SSY.
How to invest in Selvamagal Semippu Thittam Scheme? Selvamagal Semippu Thittam Scheme is the name given to Sukanya Samriddhi Yojana in Tamil Nadu, the scheme details are exactly the same as SSA and it works for the benefit of girl child.
Which is the best investment plan for monthly income? There are several investment plans such as FD, Post office Monthly Savings Scheme, Government Bonds, Mutual Fund Monthly Income Plans. These can provide you with a very good monthly income.
Which is best Monthly Income Plan for Senior Citizen in India? Several monthly income plans available such as senior citizen fixed deposit, senior citizen savings scheme, post office monthly income scheme, tax-free bonds, debt funds, and many more are the best monthly income place for senior citizens in India.
Where to invest money for good returns in India? High Return Investments We all look to earn good returns on the money we invest. Putting money in High return investments is one way of generating better income. The different places to get good returns are mutual funds, equity, and gold investment in India.
What are best investment options for salaried person in India? For a salaried class, there are many places where investments done. Know the best investment options for salaried person in India. The best investment options for a salaried person are Gold investments, PPF account, national pension scheme, ELSS, and fixed deposits.
What is the difference Liquid funds vs. Savings accounts? Based on return liquid funds outperform savings account by anything between, 2-4 % points which is 50-100 % higher return than the savings account. So, purely on the basis of returns investing in liquid funds seems a better option.
What are features of India Post Payments Bank (IPPB)? Branches India Post Payments Bank or IPPB, a Government of India owned payment bank was launched on 1st September 2018 offering doorstep banking especially in rural areas of India. The features include 4% Internet on savings banks accounts, easy money deposit, withdrawals, doorstep banking facilities, micro-ATM facilities and much more.
How to save Rs. 5000 in 6 months easily? Saving Rs. 5000 in 6 months does not need a lot of effort. Creating proper budget along with a few simple daily practices, reducing your debt and investing wisely is the key here.