While equity investors have witnessed muted returns in the last two years because of a volatile market, investors of small savings scheme have enjoyed stable returns of up to 8.2% in the same time frame. At a time when leading indices like the Nifty 100, Nifty Midcap 150 and Nifty Smallcap 250 have given modest returns, small savings schemes such as Senior Citizen Savings Scheme and Sukanya Samriddhi have given a stable return of 8.2% each. Other popular small savings schemes like National Savings Certificate (NSC) and Public Provident Fund (PPF) are also offering 7.70% and 7.1% interest rates, respectively. Small savings scheme interest rates In the table below, you can see that most small savings schemes are offering more than 7% interest rate to their investors. Small savings schemes Interest rate Post office savings account 4% Post office RD 6.70% Post office MIS 7.40% SCSS 8.20% PPF 7.10% SSA 8.20% Post office TD (5 years) 7.50% KVP 7.50% MSCC 7.50% NSC 7.70% Source: Post Office website What is good about small savings scheme interest rates is that the government kept them unchanged since January 2025 despite many indicators suggested a rate cut. Equities have given modest returns in last two years Equities are often known as instruments that help investors beat inflation in the long run. Historically, they have provided better long-term returns compared to small savings schemes. But in the short term, their performance may fluctuate heavily, resulting in low returns compared to small savings schemes. Looking at the two-year performance of leading indices such as Nifty 100 Largecap and Nifty 150 Midcap, you can see that they have failed to beat even low-interest small savings schemes rates. Performance of key indices in last two years As per data available on the Niftyindices website, the Nifty 100 index that represents India’s top 100 companies in terms of market capitalisation hasn’t given any returns in the last two years. Other indices such as Nifty Next 50, Nifty Midcap 100 and Nifty Smallcap 250 have also given modest returns in the same time period. Index 1 Year CAGR 2 Year CAGR Nifty 100 -1.52% -0.15% Nifty Next 50 3.99% -0.38% Nifty Midcap 150 5.19% 4.39% Nifty Smallcap 250 9.50% 1.12% Source: NiftyindicesPerformance of key mutual fund categories in last 2 yearsA lot of people prefer mutual funds to stocks as they want to reduce the risk while benefiting from equity returns. But data of key mutual fund categories picked from Morningstar shows that large, large and midcap, flexicap and multi cap categories haven’t given any returns in the last one year. Looking at the two-year data, no category has delivered a 6% annualised return, which is the interest many bank fixed deposits (FD) are offering at present. While at the same time, some small savings schemes are offering 8%+ interest rates. MF category 1-year CAGR 2-year CAGR Large cap -5.37% 0.68% Large & Midcap -2.48% 3.25% Midcap 1.09% 5.29% Smallcap 0.99% 4.25% Flexicap -3.45% 1.77% Multicap -1.44% 3.40% ELSS -4.74% 1.21% Source: MorningstarAre small savings schemes better than equities then? After looking at data, many readers may think that why take a risk in equities when small savings schemes are offering 7-8% stable returns? But here is the catch. If you have a short-term investment horizon, equities may not be the best option if you are investing during a market downturn. But in the long-term, there are high chances of equities delivering higher returns than small savings schemes. For examples, the Nifty 100 largecap index has given 11.99% annualised return in 10 years and 10.64% in 20 years. It means if someone had invested Rs 1 lakh 20 years ago, its value would have been Rs 9.04 lakh in today’s terms. If we talk about the Nifty Midcap 150 index, it has delivered 17.96% annualised return in 10 years and 13.67% in 20 years, which means Rs 1 lakh invested 20 years ago has grown to nearly Rs 13 lakh. Now, if you compare these returns with small savings schemes’ returns, equities are hands down winners. Index 5-year CAGR 10-year CAGR 15-year CAGR 20-year CAGR Nifty 100 9.15% 11.99% 10.34% 10.64% Nifty Next 50 13.76% 13.92% 12.95% 12.60% Nifty Midcap 150 18.05% 17.96% 15.79% 13.67% Nifty Smallcap 250 17.52% 15.28% 13.14% 12.02% Data source: NiftyindicesWho should invest in equities and small savings schemes? Aditya Agarwala, co-founder and chief investment officer at InvestValue, told ET Wealth Online about the timeframe and investor type suitable to invest in small savings schemes and equities. Who should invest in small savings schemes? Small savings schemes are suitable for conservative investors seeking safety over high returns, particularly those in retirement or mid-career who prioritise capital protection. Small savings scheme investor profile Recommended Schemes Why Senior citizens (age 60+) Senior Citizen Savings Scheme (SCSS) at 8.2% Highest guaranteed return with tax benefits on principal amount. Parents with girl children Sukanya Samriddhi Yojana (SSY) at 8.2% Built for girl child savings till age 21 and interest is completely tax free Tax-conscious investors PPF (7.1%), NSC (7.7%), 5-year TD (7.5%) Section 80C deductions under old tax regime Regular income seekers Monthly Income Scheme (7.4%) Fixed monthly payouts with government safety Conservative/retired investors All small savings schemes Government-backed, minimal risk, predictable returns Short-term savers (1-3 years) 1-3 year Time Deposits (6.9–7.1%) Safe medium-term savings Who should invest in equities?Equities suit investors who can tolerate volatility and don't need money for 7–10 years. Equities are the preferred choice for investors seeking wealth creation rather than just wealth preservation. Equity investor profile Why equities fit Young investors (25–40) Can tolerate volatility and benefit from the longest compounding horizon Long-term wealth builders Equity SIPs held for 10 years have a strong track record of positive returns Inflation-beating seekers Over long term, equities delivered high returns that beat inflation Growth-oriented investors Corporate earnings (EPS) growth is expected to recover to mid-teen levels in 2026 Investors with higher risk tolerance Can withstand short-term market volatility in pursuit of superior long-term returns Thus, you can see that investing in small savings schemes or equities just by looking at data can be misleading. While small savings schemes can be bad weather friend, providing stable returns irrespective of market conditions, equities are best suited for investors with a long-term horizon. It is always advisable to see your financial goals and timeframe to invest in either of the investments.