High return investments – Top 7 small saving schemes in India

High return investments - Top 7 small saving schemes in India

High return investments – Top 7 Small saving schemes in India

This Saturday, I went to Indian post office branch to withdraw the National Saving Certificates which got matured this month. I was going through the small saving schemes and the features. I felt some of them are best investment options which are getting high return on investments.

Small saving schemes in India

Indian post office (run by Govt. of India) offers small saving schemes in India. These days, small saving schemes have become popular. Gone are the days where one used to buy a National saving certificate for tax saving purpose. There are wide varieties of schemes offered by them and they are safe investments (since they are run by Govt. of India, the investment is protected). Agreed, that some of these schemes offer low interest rates compared to other investment options. However I felt, some of them are good investment options yielding high return on investment.

Before I move in providing the features, I want to tell you about the important feature I noticed in small saving schemes (which are now being offered by some of the banks too in India). Some of these small saving schemes are offered with compounding interest by Quarter. Such schemes would actually provide higher returns on investment comparing to other investment options, as the interest payable every Quarter would be compounded and the yearly interest is paid.

For e.g. If you invest Rs 1,000 at 8% interest p.a, for one year, your money would be Rs 1,080. However if the interest rate is compounded every quarter the interest rate would be as below

Interest for Quarter -1 = Rs 1,000 x 8% x 3/12 months = 20. Now your Quarter-2 investment amount would become Rs 1,020 (Rs 1,000 + Rs 20).

Interest for Quarter – 2 = Rs 1,020 x 8% x 3/12 months = 20.4. Now your Quarter-3 investment amount would become Rs 1,040.4 (Rs 1,020 + Rs 20.4).

Interest for Quarter – 3 = Rs 1,040.40 x 8% x 3/12 months = 20.8. Now your Quarter-4 investment amount would become Rs 1,061.2 (Rs 1,040.4 + Rs 20.8).

Interest for Quarter – 4 = Rs 1,061.2 x 8% x 3/12 months = 21.22.

Now at the end of the year, your investment is 1,082.43 (Rs 1,061.2+21.22)

If you observe the actual return received is 8.2% (Rs 82.43 interest on Rs 1,000 investment) against what is indicated as 8%. This is the advantage of investing in quarterly or half yearly compound interest rate saving schemes.

Top small saving schemes in India

Below are the top small saving schemes in India offering high return on investment. This list is not comprehensive as other schemes offered are with low interest rates.

1)   5 year time deposit scheme: The interest rate offered is 8.5% p.a. Quarterly interest compounding scheme. The effective yield would be 8.7% p.a. Principal is exempted u/s 80c of Indian Income tax act, 1956.

2)   5 year national saving certificate: This is my favorite saving scheme for tax saving purpose. The interest rate offered is 8.6% p.a. Principal is exempted u/s 80c of Indian Income tax act, 1956. However, I would now prefer to invest in 5 year time deposit scheme which offers 8.7% p.a. interest rates (compounded quarterly) which provides high return on investment comparing to NSC.

3)   5 year Monthly Income scheme: If you are looking for steady fixed income which is payable monthly, this investment option is good. It offers 8.5% p.a. interest rate. If you invest Rs 1 lakh, you would get a monthly income of Rs 712 (approx) for 5 years as interest.

4)   5 years recurring deposit : The scheme offers 8.4% interest rate per annum.

5)   10 year national saving certificate: The interest rate offered is 8.9% p.a. Principal is exempted u/s 80c of Indian Income tax act, 1956. If you invest Rs.1 lakh, your money would be Rs.2.38 lakhs after 10 years

6)   5 year senior citizens saving schemes : This is good scheme for senior citizens. The interest paid is 9.3% p.a. Principal is exempted u/s 80c of Indian Income tax act, 1956.

7)   Time deposits: There are 1, 2,3 and 5 year time deposits schemes. The interest rates are 8.2%, 8.3%, 8.4% and 8.5% respectively. With quarterly compound interest the effective yield would be 0.2% more then what is being offered.

Conclusion: These small saving schemes are safe investments and provide high return on investment. Investor can invest in good saving schemes which fit the investor need.

Readers, what is your opinion on these small saving schemes in India? Please give your comments

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Happy investing in small saving schemes in India

Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.


  1. vinodhchakravarthy says:

    Dear Sir,
    I have a new born and would like to deposit around 15 k in her name for a period of 20 years ( also would contribute to the same in the coming years).. kindly advise the best possible means for me
    Also for my personal savings kindly advise whether post office saving is better or bank saving is better..

    Vinodh chakravarthy

    • Suresh KP says:

      Hi Vinod, There are multiple investment options you can choose for. 1) Invest in recurring deposits in bank or post office. This is safest and you can earn 9% annualised returns 2) Invest in large cap or balanced mutual funds which would suit for your requirement. You can choose for ICICI focussed fund or HDFC Top-200 or HDFC prudence or HDFC balanced fund.

  2. Patange S G says:

    Hi Sir,

    What happens to the investment in NSC if the invester dies before maturity of NSC.

  3. Harmony says:

    This article is truly informative. Thanks

  4. Anup Singh says:

    Hi, my daughter is now 4 year’s old. I want to invest 3000 pm, for atleast 10 years with high interest & without risk , please suggest. &
    I already have 20 years jeevan anand plan & I invest 2204 rs. Premium per month.
    Anup Singh

    • Suresh KP says:

      Anup, if you want zero risk option, you should go for recurring deposit only. However if you can take small risk, your returns would be better. You can invest in Balanced funds like HDFC Prudence / ICICI Balanced fund

  5. Sunil says:


    I am an NRI (Qatar) i am starter i want to invest 10-15k every month with good interest rate (9% to 13%) for next 3 years. (Any suggestion will be highly appreciated)

    I am holding NRI a/c with Kotak Bank 

    • Suresh KP says:

      Sunil, If it is for 3 years, just go for NRE FD schemes which offers 9% tax free returns. If you can invest for atleast 5 years, you can try balanced funds like ICICI balanced fund or HDFC prudence funds

  6. Kasturaiah says:


    I would like to invest Rs.15000 every month for 5 years contineously. But my consern is, after five years I like to get back atleast Rs15000/ month as returns without effecting in inveted amount. Please suggest any plan.

    • Suresh KP says:

      Kasturiah, You have 2 different objectives. One is investing Rs 15K in high risk options for next 5 years and then getting Rs 15K per month from such investments. Invest in mid-cap funds or sector based funds every month. You may get good returns. If you can achieve this, second plan can be thought thru

  7. visalakshi says:

    Hi, iam still confused,can u please suggest some post office schemes, i heard there are some savings, which yeards 100% return, i mean,it will double your investment after 7 yrs of FD,in post office, do we have any such schemes ,please advice,



    • Suresh KP says:

      Hi Visalakshi, Check this article on ways to double your money. This should answer your question. http://myinvestmentideas.com/2012/11/10-best-ways-to-double-your-money-india/

  8. SATYAM says:

    I am 45 yrs old now and want to invest 30 lakhs lump sum for a period of 13 years .This amount is purely for investment purposeand be used after my retirement .Please suggest any plan.

  9. Sougat Kar says:

    Hi Lalit,,

    I’m investing in national pension scheme rs. 6200/- p.m. for 20 year. Can u plz tell me how much will be maturity amnt. approximately…& how can i get it. –Sougat Kar

  10. Sougat Kar says:

    Hello, i m investing in national pension scheme 6200 p.m. for 20 year,, how much will be the return ?. How can i get it i.e. return in my hand. Plz help. — Sougat

  11. Lalit vyas says:

    Dear sir

    I am having only savings in my bank upto 20lacks. I am getting the normal return given by banks. Can you  please suggest me any plan so that I may get better fixed and monthly returns back. I am a moderate risk taker. and dont understand about share markets.



    • Suresh KP says:

      Hi Lalit, You can invest in several options. Since you are moderate risk taker, you can start investing in 1) Secured NCD’s. Read my articles on upcoming NCD’s and you can consider one 2) Invest thru SIP in balanced funds to start with. You need to invest for 3 to 5 years minimum to get good returns 3) Invest in good IPO’s which I am recommeding. Recently, I suggesed Wonderla IPO which is 85% up within 1 month. This involves some risk, but investing in good IPO’s can help you to reduce risk and grow money faster 4) Finally, keep reading my articles, you would get to know how stock market, mutual fund schemes run. Based on this you can decide which investment schemes suits better to you.

  12. shashi singh says:



    tHANKS & Regards



    • Suresh KP says:

      Shashi, It depends on your risk appetite. If you are moderate risk taker, invest in mutual funds and bank fixed deposits. In mutual funds try picking up Large cap funds. You should invest for 5 to 7 funds so that you can be atleast 90% success in getting good returns. Refer our top-10 mutual funds article and invest in large cap funds.

  13. rohit khenat says:

    i have recently started earning i wana save atleast 15k per month. which is the best option plan to invest

    • Suresh KP says:

      Rohit, Start your investment through Recurring deposit by opening RD with any bank. Parallely you can start your analysing on mutual funds. You can consider investing Hybrid/Balanced mutual funds to start. Invest in HDFC Balanced or ICICI Balanced funds… Once you are familair on how MF’s run, you can invest in other category of funds and later into stocks.

  14. Balaji says:

    Hello Sir,

    My baby girl is now 10 months old, I am planning to start saving for her. I can  invest upto 40-50k/yr (tenture – 15- 18yrs) which can also be used for tax benefit. Please suggest me some good plan which will be useful for my kid when she is 18yrs.

    Note : Already I have a jeevan Saral and I am paying yearly premium of 60K/ yr.





    • Suresh says:

      Balaji, If you are looking for tax savings + money growth, best to invest in PPF. While you would get 8.5% interest the maturity interest is tax free. Alternatively you can look for ELSS mutual funds where you can get 9% to 12% annualised returns along with tax savings. Pls refer our article on top ELSS funds.

      • Balaji says:

        Hello Sir,

        Thanks for your reply I would go for PPF which is safe option, but I have a doubt in PPF can you please clarify.

        1. If I go for monthly payment, I know that it would be benefecial if we pay to the account before 5th of every month. I just wanted to know if paying ever month is better or can i invest 50k as one payment on say May 1st of ever year is better?

        2. I believe PPF locking period is 15yrs and from then on it can be increased in fold of 5yrs? Is it true?

        3. If I invest 50K in 2014 financial year this amount (along with interest) can be with drawn at 2019? what about the 50k i invest in 2015, should I wait until 2020? if thats the case tehn i wont get lump sum in 15years?






        • Suresh says:

          Balaji, Refer our latest article on how to maximise returns on PPF. You can invest during 1st week of April or before 5th of eveyr month to get maximum benefit.

  15. Asif says:


    i got got an offer in oman and will be moving abroad in a months time. Can I invest in EPF? If yes, how can I invest the same. 

    also I am interested to invest in mutual fund for long term. Suggest me two equity, two debt and two balanced funds please



    • Suresh KP says:

      Asif, EPF can be invested if you are employed with Indian employer in India. Regd second point, you can invest in ICICI Pru focussed blue chip fund, FT India blue chip fund, SBI Dynamic bond fund, IDFC Dynamic bond fund, ICICI Balanced fund and HDFC Balanced fund

  16. Jeet says:

    HI, I jst wanna to invest 4-5 k per month with high return for small tenure (approximetly 2-3 yrs), so which on e is better for me… 

    • Suresh KP says:

      Jeet, My suggestion is you should look for debt funds or hybrid funds. You can choose HDFC Balanced fund or ICICI Balanced fund kind of MF’s for medium term of 3 years. You can expect 8% to 13% returns per annum.

  17. elvinson says:

    i am looking for a schme in which i can pay (not any fixed amount) ex. 30000 in one month 50k in another month, 4k in .. so on.  

    • Suresh says:

      You have two choices 1) Consider taking Flexi FD or Variable Recurring deposit. You can deposit minimum amount of Rs 1,000 as an example and invest any higher amount of your choice every month 2) Consider taking Flexi SIP from fundsindia or fundsupermart.co.in. You can invest minimum in mutual funds and any extra you can invest at your choice.

  18. Sujata Madhok says:

    Thank you for all this information. It is very useful.

  19. priya says:

    if inflation rate is more than interest rate ,then how it is profitable?

    • Suresh says:

      Hi Priya, The risk what you are indicating is there for every investment option and not only restricted for small saving schemes. 

  20. wale says:

    i am a nigeria, hw can i invest in the schemes? what e-currency do they accept?

  21. Jason says:

    Hi Suresh 

    Nice article, thanks a lot for sharing this, but it would be nice if you could share something about venture capital investment in india and what all factors are there to consider before investing.

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