SBI FD vs Post Office NSC: Which investment option gives higher returns on Rs 4,00,000, Rs 8,00,000 & Rs 12,00,000 in 5 years?

SBI FD vs Post Office NSC: When it comes to safe and fixed-return investment options, State Bank of India Fixed Deposits (SBI FD) and Post Office National Savings Certificates (NSC) are two popular choices for Indian investors. But which one offers better returns if you invest Rs 4 lakh, Rs 8 lakh or Rs 12 lakh for 5 years? Let’s break it down.

SBI Fixed Deposit: Interest rates & return on investment

SBI offers FD interest rates ranging between 3.50% to 7.25% per annum for the general public and 4.00% to 7.75% per annum for senior citizens, depending on the tenure. The bank also offers a Tax Saving FD at 6.50% for regular customers and 7.50% for seniors.

For those looking to park funds for 5 years, here’s how much your investment can grow:

• Rs 4 lakh investment: Grows to Rs 5,52,168 (Interest earned: Rs 1,52,168)
• Rs 8 lakh investment: Grows to Rs 11,04,336 (Interest earned: Rs 3,04,336)
• Rs 12 lakh investment: Grows to Rs 16,56,504 (Interest earned: Rs 4,56,504)

SBI also provides various fixed deposit options for NRIs, such as NRO, NRE, RFC and FCNR (B), with deposits accepted in multiple foreign currencies like USD, GBP, Euro, and JPY.

Post Office NSC: Interest rate & benefits

The Post Office National Savings Certificate (NSC) currently offers a fixed interest rate of 7.7% per annum, compounded annually but payable only at maturity. The maturity period is 5 years, and there is no maximum investment limit, though the minimum deposit required is Rs 1,000.

NSC returns over 5 years for different investment amounts are as follows:

• Rs 4 lakh investment: Grows to Rs 5,79,614 (Interest earned: Rs 1,79,614)
• Rs 8 lakh investment: Grows to Rs 11,59,227 (Interest earned: Rs 3,59,227)
• Rs 12 lakh investment: Grows to Rs 17,38,841 (Interest earned: Rs 5,38,841)

Besides guaranteed returns, NSC investments qualify for tax deductions under Section 80C of the Income Tax Act, adding to their appeal.

SBI FD vs NSC: Which gives higher returns in 5 years?

When comparing pure returns over a 5-year tenure:

• NSC offers higher maturity values than SBI FD across all three investment amounts—Rs 4 lakh, Rs 8 lakh and Rs 12 lakh.
• SBI FD offers more flexibility in terms of tenures and liquidity but trails behind in interest earnings.
• NSC is ideal for investors looking for guaranteed returns with tax benefits and a fixed 5-year lock-in.

If your goal is higher returns on a medium-term investment, Post Office NSC clearly outperforms SBI FD. However, if liquidity, flexible tenures, or NRI options matter more to you, SBI FDs may suit your needs better.

For conservative investors aiming to grow their funds steadily over 5 years, NSC remains a compelling and tax-efficient choice in 2024.

(Disclaimer: Don't consider this as an investment advice. Do your own due diligence or consult an expert for financial planning)