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Eight fixed income options that beat bank FDs in returns

Voluntary Provident Fund (VPF)
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Voluntary Provident Fund (VPF)

Interest 8.65%* (same as EPF rate)
Invest for: As long as you continue with EPF
Age: No limit
Investment amount: Depends on salary
Taxation: Section 80C benefit available; interest is tax free
Useful for: Accumulating long-term wealth without any risk.
*For 2016-17; it is expected to come down a bit for 2017-18

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Listed PSU bonds (Taxable) (Values taken for SBI Bond N5)
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Listed PSU bonds (Taxable) (Values taken for SBI Bond N5)

Interest 8.55%
Invest for: 8 years (March 2026)
Age: No limit
Investment amount: No limit
Taxation: Interest and capital gains (if any) taxable
Useful for: Investors who need regular income & are in lower tax brackets.

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Senior Citizens’ Savings Scheme (SCSS)
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Senior Citizens’ Savings Scheme (SCSS)

Interest 8.3%
Invest for: 5 years, can be extended by 3 more years
Age: Above 60 years (55 for early retirees)
Investment amount: Rs 15 lakh or money received as retirement benefit, whichever is lower.
Taxation: 80C benefit available; interest is taxable
Useful for: Senior citizens who need regular income and are in lower tax brackets.

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Sukanya Samriddhi Yojana
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Sukanya Samriddhi Yojana

Interest 8.1%
Invest for: Deposits can be made till the age of 14; maturity at 21.
Age: 10 years or less
Investment amount: Rs 1.5 lakh a year.
Taxation: Section 80C benefit available; interest is also tax free
Useful for: Building long-term wealth for girl child without any risk.

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Pradhan Mantri Vaya Vandana Yojana (PMVVY)
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Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Interest 8% (this is the pension rate)
Invest for: 10 years
Age: Above 60 years
Investment amount: Up to Rs 7.5 lakh per family (maximum pension of (Rs 5,000 per month)
Taxation: No section 80C benefit; pension also taxable
Useful for: Senior citizens who need regular income & are in lower tax brackets.

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Savings (Taxable) Bonds 2018 (RBI Bonds)
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Savings (Taxable) Bonds 2018 (RBI Bonds)

Interest 7.75%
Invest for: 7 years
Age: No limit
Investment amount: No limit
Taxation: No section 80C benefit; interest also taxable
Useful for: Investors who need regular income and are in lower tax brackets.

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Public Provident Fund (PPF)
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Public Provident Fund (PPF)

Interest 7.6%
Investment for: 15 years; extendable by blocks of 5 years
Age: No restriction
Investment amount: Rs 1.5 lakh per annum (maximum)
Taxation: Section 80C benefit available; interest is tax free
Useful for: Accumulating long-term wealth minus any risk.

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Listed PSU bonds (tax-free) (Values taken for IRFC N2)
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Listed PSU bonds (tax-free) (Values taken for IRFC N2)

Interest 6.29% Yield to maturity (YTM)
Invest: for 9 years (Feb 2027)
Age: No limit
Investment amount: Coupon rates will be 25 bps lower if holding in each series goes above Rs 10 lakh
Taxation: Interest is tax free, but capital gain (if any) taxable.
Useful for: investors who need regular income and are in higher tax brackets.

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