The thinking of investors has changed in the last few years. They are now more aware than before. However, many investors still invest based on a friend’s or advisor’s advice without understanding their own needs. This is not the right approach.

Before investing, one should assess their financial situation and goals. It is always better to invest after proper evaluation. Doing this will help you choose the right investment product and get better returns. Today, we will explain which is a better option for Middle-Class investors – FD or small savings schemes.

Check the Interest Rates

If you are considering investing in a fixed deposit (FD) or a small savings scheme, it’s important to compare the interest rates and other benefits. Typically, fixed deposits offer interest rates between 6.7% to 7% per annum. Tax-saving FDs provide slightly higher interest rates.

On the other hand, small savings schemes offer varying interest rates:

  • PPF (Public Provident Fund): 7.10% per annum
  • Senior Citizen Savings Scheme: 8.20% per annum
  • Sukanya Samriddhi Account: 8.20% per annum
  • National Savings Certificate (NSC): 7.7% per annum
  • Kisan Vikas Patra (KVP): 7.5% per annum

Consider Tax Savings

If you are in a low tax bracket or zero tax bracket, the choice between FD and small savings schemes may not make a significant difference. However, focus on investing where you will get higher returns. This will ensure that your investment grows better over time.

Additionally, keep in mind when you will need the money. For example, investing in a PPF requires a longer commitment.

Make the Right Choice Based on Your Financial Goals

Choose the investment product that aligns with your financial goals, offers the best returns, and suits your liquidity needs.

Which One is Better for Middle-Class People?

FDs offer stability and flexibility but are taxable, reducing returns. Small Savings Schemes provide higher interest and tax benefits but have longer lock-ins. For middle-class investors, FDs suit short-term needs, while small savings are better for long-term growth.