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. This post is updated in Apr-2016 as there are several changes happened in post office interest rates.

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 ₹ 1,000 at 8% interest p.a, for one year, your money would be ₹ 1,080. However if the interest rate is compounded every quarter the interest rate would be as below

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

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

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

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

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

If you observe the actual return received is 8.2% (₹ 82.43 interest on ₹ 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 is revised to 7.9% in Apr-2016. Quarterly interest compounding scheme. The effective yield would be 7.9% 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 is revised to 8.1% in Apr-2016. 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 7.9% 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 7.8% p.a. interest rate. If you invest ₹ 1 lakh, you would get a monthly income of ₹ 712 (approx) for 5 years as interest.

4)   5 years recurring deposit : The scheme offers 7.4% interest rate per annum.

5)   10 year national saving certificate: . This is discontinued w.e.f. Jan-2016.

6)   5 year senior citizens saving schemes : This is good scheme for senior citizens. The interest paid is 8.6% 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 7.1%, 7.2%, 7.4% and 7.9% 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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Suresh
Happy investing in small saving schemes in India

Suresh KP

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101 comments

  1. I'm a house wife  I want to save 200 every month which scheme will be benefit for me ?after 1year how much cash will be in my account please tell me

  2. I want to know scheme that i am student i teach student and earn little bit but i want to save 1000 rs pr mnth so what to do to get high return

     

    1. Hi Sharma,

      try mutual funds which will give more return. take option of dividends reinvested instead of dividents paid out option

  3. i need to invest 15000 rs per month,and i need high interest and high return after 5 years,and it should be safe.which savings plan i should opt for?

  4. Sir,

    I woulk like to know best monthly Investment plan

    I would also like to know whether mutual funds and balance funds risky?

  5. Dear sir, impressed with ur suggestions.Am 36 yrs old nw, unmarried,fully responsible,no own home,no satisfactory job, small & collective earnings,no savings,only 2 lic,1 ppf SBI saving a/c.Now at ths stage am serious to make money fastly.Plz suggest & scheme out a data for me.I would be thankful for that.

    1. Hi Binay, Good to hear about you. Many of us fail to become rich with only 2 points. 1) We do not save enough 2) Whatever we save, we do not invest smartly. My advice is start saving per month as much as you can. Start investing in 3-5 mutual funds to start with. You can look in these top mutual funds. 1) Large cap – Birla SL Frontline fund / ICICI Pru focussed blue chip fund 2) Mid-cap – HDFC Mid-cap opps fund / Franklin India smaller co’s / SBI Midcap fund 3) Balanced – You can check HDFC Balanced Fund / ICICI Balanced fund. 

  6. Hi I want to know about short term saving policy plan like for 3yers or 5 years paying 2000 in every month so plz suggest me which policy is good for me for getting good return after maturity 

  7. Hi,

    I am a fresher and want to invest 5-10K per month in something wherein I can get good interest rates.
    Also, I would like to make the investments for short durations. Please let me know whats the best feasible option.

  8. Hello sir,

    I am a third year engineering student. I just have rs 200-500 to invest. I want to invest for the next 40 years. I want to earn 15000 per month after 40 years. I just want to start saving and invest it somewhere where my money doesn't get eated by inflation and tax.

  9. Your blog is very good, i am getting into the nuances of Savings.
    Please advice me about the latest best Government savings schemes. Thank you

  10. I want to saving annually 15000 so i want to  know what is the maximum  profitable  schems (for 10 year)

  11. i already deposting 1.5 Lak / Per Anm , in PPF and adding to that need to save another scheme around Rs.5000/pm, pls advice

  12. Thank you for sharing the information about 5 year seiner citizen scheme I am searching for the same for my father.

  13. Thank you for sharing the information about savings schemes in post office. Very nice and mostly middle class and lower middle class people can invest.

    1. Anyone who is promising fixed returns of more than 15%, you should doubt it. It is forex broker and cannot assure you such high interest. Pls be careful.

  14. I am 25 year old looking for monthly investment up to 1000 to 2000 per month. suggest me which plan is good for me.
    Thank you.

    1. Sandeep, I suggest you invest in equity mutual funds for long term of 8 to 10 years. Pick-up some good funds like ICICI focussed blue chip fund or HDFC Top-200 fund etc.

  15. Sir you represent the small savings in india. I need to know the scheme name in the post office to giving the quarter compound interest..

  16. Hi Sir,

    We have recently got married and are really looking forward to your guidance about how to go ahead for savings.

    We end up with savings averagely 15ooo Rs every month that is beings kept in savings account as it is

    Can you please suggest how to utilize or bifurcate it.

    1. Hi Shilpa, My suggestion is you should read these 2 articles. Once you read and start implementing, post your questions. 1) https://myinvestmentideas.com/2012/08/managing-costs-18-ways-reduce-expenses-save-money/  2) https://myinvestmentideas.com/2014/08/how-to-achieve-financial-independence-faster/

  17. 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..

    Bregards,
    Vinodh chakravarthy

    1. 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.

  18. 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.
    Thanks
    Anup Singh

    1. 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

  19. Hi,

    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 

    1. 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

  20. Hi,

    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.

    1. 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

  21. 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,

     

     

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

  22. 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.

  23. 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

  24. 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

  25. 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.

    thanks 

    lalit

    1. 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.

  26. MY DAUGHTER IS NOW 11 YEARS OLD., PLEASE SUGGEST ME SOME GOOD PLAN, WHICH WILL BE USEFUL FOR MY KIDS., WHEN SHE IS 20 YEARS OLD,

     

    tHANKS & Regards

    SHASHI SINGH

     

    1. 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.

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

    1. 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.

  28. 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.

     

    Regards,

    B

     

    1. 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.

      1. 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?

         

        Regards,

        B

         

         

        1. 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.

  29. Hi, 

    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

    thanks 

    Asif 

    1. 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

  30. 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… 

    1. 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.

  31. 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.  

    1. 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.

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

  32. 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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