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FD vs. Small Savings: 5 Crucial Checks Before Investing Your Money
M
Moneycontrol•24-09-2026, 22:41
FD vs. Small Savings: 5 Crucial Checks Before Investing Your Money
- •Don't just compare headline interest rates; consider five key factors before investing in FDs or small savings schemes.
- •Investment amount matters: FDs offer more flexibility for large sums compared to schemes like PPF (Rs. 1.5 lakh limit) or SCSS (Rs. 30 lakh limit).
- •Liquidity is crucial: FDs allow premature withdrawal with penalties, while small savings schemes like PPF (15-year tenure) have stricter withdrawal rules.
- •Tax implications significantly impact actual returns; interest on FDs is generally taxable, while small savings schemes have varied tax treatments.
- •Consider the investment's purpose (e.g., long-term savings, regular income) and safety, including DICGC insurance for bank FDs up to Rs. 5 lakh.
Key Questions Answered
For the July to September 2026 quarter, small savings rates remain unchanged with PPF offering 7.1 percent, NSC 7.7 percent, SCSS 8.2 percent, and the five-year Post Office Time Deposit offering 7.5 percent.
Bank deposits are covered by DICGC insurance up to Rs. 5 lakh per depositor per bank, which includes both the principal and interest subject to applicable rules.
PPF allows annual deposits of up to Rs. 1.5 lakh in a financial year, while the Senior Citizens Savings Scheme has a maximum investment limit of Rs. 30 lakh.
