5-Year Post Office Recurring Deposit Account: It is an account where you deposit equal amount of money every month. Interest rate is 7.5% quarterly compounded, which approximately equals 7.7% p.a. Upto half the accumulated amount can be withdrawn after one year. Rupee 1 invested every month becomes Rs. 72.8 after 5 years.
Post Office Time Deposits: If 5 year period seems too long, and if you wish to invest in a lump sum, a time deposit account may be considered. You can opt for 1 year, 2 year, 3 year or 5 year deposit. Rate varies from 6.25% to 7.5%, depending on the number of years. Premature withdrawals are allowed, but the deposit cannot be withdrawn partially. If you withdraw within 6 months, you will not earn any interest. Time deposits qualify for section 80 rebate.
Monthly Income Scheme: Very popular of the elderly, it gives a monthly income of 8%. The scheme runs for 6 years. Premature withdrawals are allowed with a small penalty (1-3% less interest rate). But if the deposit is left intact for 6 years, 5% bonus is awarded.
15 year Public Provident Fund: Hated the most for its long term nature and poor liquidity. But deposits qualify for section 80 rebate of income tax. Interest is 100% tax-free. Withdrawal is allowed every year, from 7th financial year. Loan facility available from 3rd financial year. Interest rate is 8% compounded annually.
Kisan Vikas Patra: Money doubles in 8 years and 7 months - giving an interest rate of 8.4% compounded yearly. Early withdrawals allowed, and there is no limit on investment.
National Savings Certificate: Money becomes 1.6 times after 6 years - giving a rate of 8.16%. Both deposits and yearly interest amount qualify for section 80 rebate of income tax.