Little drops make a mighty ocean. From childhood we have been taught to save for the future. Opening a savings account has become a necessity once you cross 18 years of age to manage your own finances. However, there are other high yielding instruments that you do not want to overlook as an alternative option to savings account.

There are both long and short-term instruments that give better returns when compared to savings account. However, one cannot deny the usefulness of the savings account in terms of facilitating financial transactions at ease. If you want better returns, alternate vehicles could help you here.

#1. Liquid Funds

This is typically debt mutual funds that can be short-term investment instruments. This includes treasury bills, certificate of deposit, commercial paper, government securities etc. This type of instrument fetches returns with interest rate of up to 8% per annum for short-term investments. The investors can park the funds for a few days or months to earn returns for the holding period. However, the returns are subject to market risks.

Besides the higher returns, liquid funds get you tax benefits when compared to savings account. An individual who comes under higher tax bracket will have to pay high amount of interest in savings account. In mutual funds, long-term capital redeemed after a year will attract 20% of after indexation which is a huge tax benefit.

#2. Ultra-Short-Term Funds

This is a kind of debt fund which is very much close to liquid funds except that it can mature before 91 days. These short-term funds can be invested in securities that can mature within a week to 18 months. The returns are little higher and quicker than the liquid funds.

#3. Recurring Deposit

This is another popular vehicle that allows an individual to earn a fixed return at the end of maturity date after having deposited a small amount regularly every month. Generally, the interest rate may range between 4.5% to 8% depending on the tenure of the investment. When compared to savings account, this account gives you higher returns, however, you cannot withdraw money anytime you wish. You may have to pay a penalty for premature withdrawal.

#4. Gold ETFs

Investing in gold is preferred by a lot of people in India to get high returns in a long term. You no longer have to buy gold in physical form for investment. You can now buy Gold ETFs (Exchange Traded Funds) online and get the returns in the long-term as per the market value of that time.

This is a kind of open-ended mutual scheme that does not have any risk of theft. You can either sell the gold ETFs as per the market value or buy the gold in physical form. The interest rate ranges between 3.5% to 7.5% per annum.


You may not have been familiar with the above-mentioned alternatives before. Though these options bring higher returns, a careful study and research are essential before investing in them.