Comparing savings plans: Which options offer the best returns?

Savings plans are important because they provide an organised strategy for saving aside a portion of your income for later use, guaranteeing financial stability and peace of mind. The correct savings strategy, whether for retirement, school, or an emergency fund, may help you achieve your financial objectives. Utilising a savings calculator can further streamline this process, helping you make informed decisions about where and how much to invest.

Types of savings plans

  • Public provident fund (PPF)

The Public Provident Fund (PPF) is one of the most preferred long-term investment instruments which is government-backed. It provides tax exemptions under section 80C where individuals can invest up to Rs 1.50 lakh per annum, which are allowed as deductions from taxable income. The interest earned and the maturity proceeds are also tax-free, which makes it a very tax-efficient investment. PPF accounts have a maturity period of 15 years which can be further extended in intervals of 5 years. This is determined by the government every quarter to guarantee a safe and fixed rate of return.

  • Fixed deposits (FDs)

Fixed deposits are among the most popular and secure best savings plan provided by banks. They offer investors a higher interest rate than the normal savings accounts up to the given maturity period. Interest rate is determined by the tenure and the amount of deposit, and it is a fixed rate for the complete term. Investors can decide how often they wish to receive interest – monthly, quarterly, or annually. FDs are regarded as highly safe because they are protected from market volatility and have stable returns.

  • Recurring deposits (RDs)

RDs provide an opportunity to invest a fixed amount every month in an RD account and earn interest like the FDs. RDs are ideal for individuals with a steady income to save, without having to invest a huge amount initially. The tenure of an RD can be as low as six months or as high as ten years, and the interest earned is subject to the income tax slab of the depositor. This makes RDs effective in planning for specific financial needs such as the purchase of a car or a tour.

  • Sukanya samriddhi yojana (SSY)

Intended to support the welfare of the girl child, the Sukanya Samriddhi Yojana has a higher rate of interest and is tax-exempt. A girl child account can only be opened by the legal guardians of the girl child until the girl child is ten years old. The account can be opened with a minimum of Rs 250 and a maximum of Rs 1.50 lakh annually, with the same being entitled to a tax exemption under Section 80C. The scheme matures when the girl turns 21 or upon her marriage after the age of 18.

  • National savings certificates (NSC)

National savings certificates are bonds floated and marketed by the government mainly for small savings and income tax saving instruments. They have fixed interest with a maturity of five years. The interest on NSCs is compounded annually but only paid at the time of maturity of the certificates. Investments up to Rs 1. 5 lakhs in NSC are eligible for exemption from income tax under section 80C every financial year.

  • Equity-linked savings scheme (ELSS)

ELSS funds are mutual fund schemes that mainly invest in the equity market and provide the twin advantages of growth and tax efficiency. These funds have a lock-in period of three years, the shortest among tax-saving investments under Section 80C. Investors who are willing to take moderate risks can find ELSS attractive as it offers the possibility of higher returns associated with market performance.

  • Unit-linked insurance plans (ULIPs)

ULIPs are a type of product that provides both the benefits of insurance and investment. Out of the premium paid, the first part is used to provide life coverage, and the rest is invested in equities and debts. They are versatile regarding investment opportunities and can yield high returns based on the prevailing market forces. The ability to claim tax deductions on the premiums paid and tax exemptions on the maturity proceeds is an added advantage.

  • Senior citizens savings scheme (SCSS)

Primarily aimed at senior citizens of 60 years and above, SCSS is an essential tool in the retirement planning kitty of the elderly. The scheme provides a safe, reliable, and consistent revenue stream with one of the highest interest rates among saving products guaranteed by the government. The interest is payable every quarter and all of it is taxable. The duration of SCSS is five years, renewable by three years once the scheme is fully mature.

  • Post office monthly income scheme (POMIS)

This scheme is a low-risk saving instrument, which pays a fixed amount every month. The maximum investment limit is Rs 4. 5 lakhs for a single account and Rs 9 lakhs for a joint account. POMIS has a term of five years with interest to be paid monthly at a rate determined by the government from time to time.

  • Voluntary provident fund (VPF)

The Voluntary Provident Fund is similar to the Employee Provident Fund in the sense that employees can contribute more than 12% of their wages towards their provident fund if they so desire. The rate of interest on VPF is similar to the interest rate of EPF, which makes it a good tax-free investment. The maturity period is similar to that of EPF normally at the time of retirement or resignation and the contribution made to VPF also enjoys tax exemptions under section 80C of the Income Tax Act.

  • Mutual funds

There are numerous schemes that mutual funds provide for investors depending on the risk tolerance and investment objectives such as equity funds, debt funds, and hybrid funds. Mutual fund yields depend on market trends and the investment portfolio of the mutual fund in question. They provide the convenience of SIP (Systematic Investment Plan) for investing regularly. Thus, although the return on well-managed funds is not guaranteed, the potential for high returns makes them ideal for both short and long-term investments.


Choosing the appropriate savings plan is critical. While each plan has individual advantages, your decision should be based on your financial objectives, risk tolerance, and investment horizon. A savings calculator can help you make the best possible decision. It not only allows you to see the potential development of your investments, but it also supports you in strategically planning your financial future. Remember that incorporating a strong savings strategy into your financial portfolio is more than just an option; it is a necessary component of a safe and prosperous future.

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