Expense is part of any financial management process and is an important concept of investment. Investing is one of the many business plans, and every investor aims to protect his funds for the future and get a good return on his investments. This is so, especially in India, where most investors normally incline government-related investment with an assurance on their money. One such available investment option nowadays is the Kisan Vikas Patra (KVP). In this blog, you will learn about the five key advantages of investing in Kisan Vikas Patra and why it may be perfect for you.

What is Kisan Vikas Patra?

Kisan Vikas Patra is a small savings scheme launched by the National Savings Institute of India in 1988. The main role of this scheme is to enable the investors to be able to invest in an organization for a long-term investment and earn on their investment. The KVP certificates can be bought from any post office within India. The investing amount differs, and the government did not prescribe any maximum limit. After investing the money, the certificate is again effective for a maximum of 124 months, or 10 years, after which the invested amount as well as the interest are reclaimed by the investor.

The following are some of the advantages of investing in Kisan Vikas Patra:

1. Guaranteed Returns: Perhaps the most outstanding feature of KVP is the academic certainty of returns on investment. Self is self-explanatory as to suggest a part of speech for the banking interest rates; the interest charges are set by the government and are subject to periodic revision. Currently, KVP is earning 6.9% simple interest per annum on its capital investment plan. This implies that, in a given interest rate period, interest is charged only on the principal amount as well as not on the outstanding interest. Looking at the overall investment with principal, the total return of investment on a 10-year investment is not insignificant.

2. Long-term Investment Option: It is with the fact that Kisan Vikas Patra is a longer-term investment product. The minimum investment time is 2 and a half years; the maximum time period is 10 years. This makes it the best gold to invest in for those who are planning to set up for future endeavors such as retirement, children’s college education, or a down payment on a house.

3. Flexibility in Investment Amount: With KVP, you can buy multiples of 100, and there is no upper limit for investment. This makes the investment within the reach of investors of any category in terms of financial capacity. For beginners, you’re not required to place a lot of cash at risk initially with the option of adding more money, which will buy stocks later as your investment grows.

4. Safe and Secure Investment: Being an initiative of the Government of India, KVP also guarantees protection of your invested money. It is actually referred to as the risk-free investment because the government stands for the returns as well as the amount of capital invested. Also, KVP certificates are covered with an insurance facility maximum up to Rs. 1 lac by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

5. Nomination and Transfer Facility: The main advantages of investment in KVP include the possibility of indicating a beneficiary in case of the investor’s death. This safeguards the possibility of allocating the required number of investment proceeds to the desired beneficiary. Also, it is easy to transfer from one person, the post office, or anyone with just the KVP certificates.

6. Accessibility: KVP certificates are available in post offices across the country, which means it is convenient for the investors to procure this scheme. Further, these certificates can also be encashed very easily at any post office with the least formalities.

7. Liquidity: KVP can be fully or partially encashed before maturity, but certain restrictions apply to partial withdrawals. If the certificate is redeemed within a period of two and a half years, a penalty of 1% will be deducted from the amount of interest. This gives some liquidity to the investment, so the money can be used in the event of an emergency.

8. Tax Benefits: According to income tax rate, interest earned on KVP is taxable. But, unlike most investment opportunities, there is no TDS that is taken whereby the government takes a certain percentage of the interest earned. Besides, an investor qualifies for a tax exemption under the specific section 80-C of the income tax act for the money invested in the KVP within the set maximum limit.

Conclusion

Kisan Vikas Patra is one of the safest investment instruments backed by the government, where investors get a good return and have vast freedom. These characteristics make it especially suitable for investors who want to build a long-term investment portfolio because of its long-term investment horizon, guaranteed rates of return, low cost, and easy availability. When you invest in KVP, you can be rest assured that your hard-earned money is safe and that you are closer to meeting your financial goals. Begin your investment process with KVP now and gain the advantage of a secure and profitable investment product.

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