NSC to be the best bet for investors
Among the avalanche of new-age financial products, National Savings Certificate (NSC) stands out as the only tried and tested investment vehicle. A secure and conservative instrument, it continues to attract both investors and financial experts.
Floated by the government and distributed through the postal department, NSCs give 7.8 per cent interest rate and an investment up to `1 lakh per annum qualifies for IT rebate under Section 80C of the Income Tax Act. They are specially designed for the salaried class and businessmen who are income-tax assessees. While there is no limit on the maximum amount which can be invested in NSCs, one has to wait for five years for maturity.
“Post demonetisation, the tendency of people to invest in stock markets and MFs has increased. One should always keep in mind that they are subject to risk, which is overlooked by many. But in case of NSCs, though the rate of return might be less, they guarantee fixed returns. Also, they are easy to operate. Not just senior citizens or conservative investors, even young investors can benefit, if they allocate a part of their investment towards NSCs,” says M Devaraja Reddy, a chartered accountant and former president of ICAI.
He adds that he will recommend NSC any day, irrespective of the investor’s age and risk appetite. NSCs, however, are not aggressively promoted or publicised. A major attraction of NSCs is that they can be kept as a collateral security to get loans from banks and no tax is deducted at source.
“As the financial sector is getting digitised and online avenues for investment are springing up, many youngsters are coming forward to invest in NSCs,” says Preeti Khurana, chief editor of Clear Tax. According to her, investments are moving from physical assets like gold and real estate to financial assets. “The option of investing online using a laptop or smartphone is what driving investments into these segments, while NSCs do not offer this convenience to new age investor. One big advantage of NSCs is they can be accessed even from the remotest parts of the country, as post offices network is spread across the country,” Khurana adds.