SCSS vs SBI 5-year FD vs RBI Floating Rate Bond: Which offers the highest income on Rs 20 lakh investment?

Senior citizens looking for a regular income often prefer investment options that offer low risk and stable returns. So, many senior citizens invest in instruments such as Senior Citizens Savings Scheme (SCSS), fixed deposits (FDs), RBI Floating Rate Savings Bonds, etc. In all of them, they can get stable returns that can fund their retirement. Many banks, including State Bank of India (SBI), offer 5-year senior citizen FDs. If you are a senior citizen with a Rs 20 lakh investment amount, where can you generate the highest returns among these three schemes- SCSS, SBI 5-year senior citizen FD or RBI floating rate bonds?

The SCSS offers a quarterly payment. FDs also have the option to pay interest quarterly. However, RBI bonds offer biannual payments. There is no maximum investment limit for FDs or RBI bonds, while the SCSS has a maximum investment limit of Rs 30 lakh.

The Senior Citizens Savings Scheme (SCSS) is popular among senior citizens because it's backed by the government and provides a regular quarterly income.

Right now, the interest rate on SCSS is 8.2% per annum, and interest is paid every quarter. The maximum you can invest in an SCSS account is Rs 30 lakh.

If a senior citizen invests Rs 20 lakh in the SCSS at an 8.2% interest rate, the quarterly interest will be approximately Rs 41,000, which is equal to approximately Rs 13,667 per month.

Fixed deposits offer regular income on a one-time investment. The interest rate is fixed at the time of investing. Investors get the interest amount on maturity, but they can also opt for a monthly, quarterly or half-yearly payouts if the bank provides them with these options.

The SBI senior citizen 5-year FD offers an interest rate of 7.05%. So, if a senior citizen invests Rs 20 lakh in the SBI FD,, the quarterly payout will be approximately Rs 35,250, which will be equal to about Rs 11,750 a month.

RBI Floating Rate Savings Bonds are issued by the government. These are low-risk investment options for risk-averse investors. The interest rate on these bonds is linked to the National Savings Certificate (NSC) rate and is reset every six months. The current interest rate in the RBI bonds is 8.05%. They have a maturity period of seven years, but senior citizens get an early exit option.

The annual interest income for a senior citizen investing Rs 20 lakh in RBI Floating Rate Savings Bonds at an annual interest rate of 8.05% would be Rs 1.61 lakh. But the interest is paid half-yearly to RBI bond holders. Hence the investor would receive Rs 80,500 every six months, which is equal to approximately Rs 13,417 a month.