As FD rates fall, here's where you can invest for higher returns

New Delhi: In the present scenario, where interest rates are following a downward slope, investors dependent on income from traditional financial instruments such as fixed deposits (FDs) don't have much to cheer about. Banks are offering interest rates in the six to seven percent range for different time periods. Even the latest 25 basis point cut by the Reserve Bank has not helped much in improving the scenario. So, what should the investors do?

Here are the possible options:

1) EPFO

The Employees Provident Fund Organisation (EPFO) offers 8.65 percent rate of return for its over 4.5 crore subscribers for 2016-17. For those who don't trust other financial instruments with their hard owned money, it's the best bet.

2) Debt Mutual Funds

On the basis of one's requirements, money can also be invested in debt mutual fund scheme. These funds are of different nature namely liquid, ultra short-term, short-term, medium-term, dynamic bond, corporate bonds. Over the past one year, liquid funds have given an average 6.62% returns, ultra-short term fund returns have been 7.45%, and short-term funds have given 8.62%.

3) Senior Citizens’ Savings Scheme (SCSS)

SCSS, at present, offers an interest rate of 8.3 percent. So, any senior citizen can invest in the scheme for a period of 5 years, with an option of stretching it by 3 more years. Nevertheless, an investor can only invest up to Rs 15 lakh in the scheme. It offers a regular income.

4) Public Provident Fund (PPF)

PPF also offers an attractive return 7.8 percent. One can invest Rs 1.5 lakh in a year here. However, PPF doesn't offer an option of providing regular return. Even, it's not a very liquid option and there is a limit to the amount that can be invested each year. But, it offers tax fee returns. Even the National Savings Certificates (NSCs) offer an interest rate return of 7.8 percent.

5) Post Office MIS

Post Office MIS offers an interest of 7.6 percent per annum. One can invest upto Rs 4.5 lakh in the five-year plan. Although one can receive monthly income out of it, the returns are taxable.