Here is a wagon wheel for the small savings schemes we have in India.
I have tried to show the latest increment in percentage points and when the new interest rates are applicable from.
Though this is a good way to look at it, I will mostly remove the older interest rates in the future updates that I make as it makes no sense to show it. The current rates are what we all care about.
Let me know your thoughts on this and whether you like it or now.
I will update this with new rates as and when the are announced.
Good to see all the schemes under one umbrella. It is beneficial for a quick comparison on returns.
There is nothing that can beat the power of compounding in PPF with high interest rate. NSC is giving 0.1% more but lacks the power of compounding.
EPF was the best instrument but interest rate fluctuations makes it an unpopular investment. If given a choice employees would take that money in hand rather than mandatory deduction.
Bank FDs I think provide more interest rate. I know IDBI gives 9.5% for 5 years.
http://www.idbi.com/interest_rate.asp
I am sure other leading banks would be around 9% as well.
Savings bank account I think is also giving around 6-7% now. The deregulation has introduced stiff competition, which is benefitting the customers for a change.
What is MIS scheme? I never heard of it, where and how is it done?
Hi,
MIS is Monthly Income Scheme. It gives interest monthly in your hand and it is not compounded i.e. If you are not withdrawing your interest it remains in your account and earn nothing. This scheme was earlier popular due to bonus part at maturity. Bonus part is now past.
In past people do RD of MIS Interest. So after 5-6 years with RD+Bonus, MIS performed better than bank FD. But sad part, bonus is no more so nothing attractive now.
One more thing 5 year NSC is missing from graph and SCSS is also missing
Thanks Kranti for explaining about the MIS. Can you tell who offers this scheme? Banks, Post office?
From what you have explained, it does not seem to be an attractive investment option.
It is offered by Post office.
@Kranti,
Yes bonus was taken away in Dec, 2011. In the past too they took it away and brought it back. I had renewed two of my MIS’s in september so i got the additional bonus.
Vivek, these are small saving schemes or postal office schemes and not bank ones.
@TheWealthWisher,
Very informative & helpful. I think they could have increased MIS rates to 8.5%. I know a lot of people invest in MIS. Every month when i go to collect my money in the post office i have to stand for almost one hour. Also 5 year RD is at 8% which is less than nationalized banks who offer 9% for over 2 years.
I am fully agree with you. Post office site says if you open RD+MIS it will transfer interest automatically from MIS to RD. But in real there is nothing like that.
@Kranti,
Moreover if you opt for ECS option for MIS, there is no guarantee that funds will be transferred to your account on the given date. Many people used to complain that interest amount never used to be credited on time.
Yes, post offices are not efficient like bank. As compared to banks they are sill in under development state.
Absolutely correct, that is the reason I stopped investing in NSCs. It is such a waste of time standing in long queues and keep arguing with the officials even on trivial issues.
Rakesh, sorry to ask you but are you investing in every product under the sun ? Do you really need MIS at this young an age ?
@TheWealthWisher,
I have not invested in MIS, its my parents money.
MIS interest rates were increased to 8.5% recently.
http://articles.economictimes.indiatimes.com/2012-03-26/news/31240351_1_ceiling-in-ppf-savings-small-savings-schemes-cent
@Pattu,
Thanks for the confirmation, I guess this would be applicable to new accounts, I had renewed mine in September, 2011.
Appreciate your reply Pattu, let me see whether I can update the wagon wheel again.
Thanks. Its a very nice graphic. Would be nice if it could made into an applet where you can rotate it with the mouse! A good picture needs no accompanying text!
Updated the new wagon wheel with MIS,. SCSS and 3 and 5 Year Time Deposits.
I think MIS and 5yr MIS is same. One more thing 5 yr NSC is missing.
@TheWealthWisher,
Yes 5 year MIS and MIS are one and the same, moreover the tenure for post office MIS is 6 years.
@Rakesh
From December 2011 Tenure is changed from 6 to 5 years.
@Kranti,
Hmm, i missed that, thanks for pointing it out. I think this would be applicable for new accounts only as the due date in my pass book is 6 years.
Updated with the latest comments to include 5 YR NSC and remove dupe MIS entries.
which r giving compounding returns
NSC is compounded annually whereas RD is quarterly.