Social media claims Publish Workplace MIS + RD provides 8.8% returns. Is it true? Discover the actual post-tax XIRR and bust the parable of so-called specialists.
Each few months, new movies and social media posts declare to have “found” a wise trick to earn larger returns from Publish Workplace schemes. One such viral thought doing the rounds is —
“Put money into the Publish Workplace Month-to-month Earnings Scheme (MIS) and reinvest the month-to-month curiosity in a Recurring Deposit (RD) — you’ll get 8.8% returns!”
A government-backed, risk-free 8.8% return sounds too good to disregard. However as I all the time say, in private finance, if one thing sounds too good to be true, it normally is.
So, let’s break down this declare utilizing the precise Publish Workplace rates of interest for Oct–Dec 2025, perceive how MIS and RD work, and calculate the actual return (XIRR) for various tax conditions — together with zero tax.
Publish Workplace MIS + RD Returns: Can You Actually Earn 8.8%?
Understanding the Fundamentals: What Are MIS and RD?
Earlier than calculating returns, we have to perceive how every of those schemes features.
Publish Workplace Month-to-month Earnings Scheme (MIS)
- You make investments a lump sum quantity (say Rs.9,00,000).
- The federal government pays you month-to-month curiosity for five years.
- Present rate of interest (Oct–Dec 2025): 7.4% each year (as per Basunivesh.com Publish Workplace Curiosity Charges Replace).
- You obtain Rs.9,00,000 × 7.4% ÷ 12 = Rs.5,550 monthly as curiosity.
- After 5 years, your Rs.9,00,000 principal is returned in full.
So, MIS is principally an income-generating scheme. It doesn’t reinvest the curiosity — it’s important to manually use or reinvest that month-to-month earnings.
Publish Workplace Recurring Deposit (RD)
- In RD, you make investments a set quantity each month for five years.
- It earns 6.7% annual curiosity, compounded quarterly (not month-to-month).
- On the finish of 5 years, you obtain your complete deposits + gathered curiosity.
RD is right for many who wish to construct financial savings step by step. Now, on this “viral combo technique,” the MIS month-to-month curiosity is being redirected into an RD each month.
The Viral Declare — “Earn 8.8% Return!”
Right here’s the story many movies and posts inform:
- Make investments Rs.9,00,000 in MIS.
- Obtain Rs.5,550 monthly as curiosity.
- Deposit Rs.5,550 each month right into a 5-year RD (incomes 6.7%).
- After 5 years, get Rs.9 lakh (MIS maturity) + Rs.3.9 lakh (RD maturity).
- Whole maturity = Rs.12.9 lakh.
- Therefore, 8.8% return!
At first look, it seems to be completely logical. However whenever you dig deeper, you’ll understand it’s mathematically flawed. Let’s see why.
Why This Calculation is Incorrect
- It Ignores Taxes
Each MIS and RD curiosity are absolutely taxable below “Earnings from Different Sources.”
For those who fall in a 20% or 30% tax slab, your efficient return falls sharply.
Even in case you are within the 0% tax bracket, keep in mind that no Publish Workplace scheme (apart from PPF or Sukanya Samriddhi) provides tax-free curiosity.
- It Assumes Month-to-month Compounding for RD
That is the most typical mistake in viral calculations.
Publish Workplace RD compounds quarterly, not month-to-month.
Which means each three months, the curiosity is added to the stability — not each month. Therefore, the maturity quantity will probably be decrease than what these viral posts declare.
- It Makes use of Easy Averages As an alternative of XIRR
Whenever you make investments at completely different occasions (like each month into an RD), you can not simply add up complete returns and divide by the variety of years.
The proper solution to discover the true annualized return is through the use of the XIRR (Prolonged Inside Charge of Return) methodology, which accounts for the timing of each money influx and outflow.
Let’s Calculate the Actual Return (Utilizing Precise Charges)
Let’s assume you make investments Rs.9,00,000 in MIS at 7.4%, and the month-to-month curiosity is invested in a 5-year RD at 6.7% (quarterly compounding).
We’ll calculate for 4 tax situations:
- Zero tax legal responsibility
- 5% slab
- 20% slab
- 30% slab
Frequent Assumptions
- MIS Curiosity Charge: 7.4%
- RD Curiosity Charge: 6.7% (quarterly compounding)
- Length: 5 years (60 months)
- Preliminary Funding: Rs.9,00,000
- RD began every month with post-tax MIS curiosity.
Case 1: Zero Tax Legal responsibility
You obtain the total Rs.5,550/month from MIS and reinvest it in RD.
RD Maturity Calculation (6.7% compounded quarterly):
After 60 month-to-month deposits of Rs.5,550, your RD matures at roughly Rs.3.96 lakh.
On the finish of 5 years, you additionally get again Rs.9,00,000 from MIS.
Whole Maturity = Rs.9,00,000 + Rs.3,96,000 = Rs.12,96,000
Once we calculate the XIRR, it really works out to round 7.4% each year.
So, for somebody who pays zero tax, this combo roughly equals the MIS price itself. There’s no “further magic” occurring right here — the 8.8% declare is just fallacious.
Case 2: 5% Tax Slab
Tax reduces your month-to-month reinvestment to Rs.5,272 (Rs.5,550 – 5%).
Your RD matures at roughly Rs.3.76 lakh, and also you get again Rs.9 lakh from MIS.
Whole Maturity = Rs.12,76,000
XIRR = ~7.1% each year
Case 3: 20% Tax Slab
After 20% tax, your reinvestment falls to Rs.4,440/month.
Your RD matures at roughly Rs.3.12 lakh, and MIS principal of Rs.9 lakh is returned.
Whole Maturity = Rs.12,12,000
XIRR = ~6.2% each year
Case 4: 30% Tax Slab
After 30% tax, you’ll be able to reinvest solely Rs.3,885/month.
Your RD matures at roughly Rs.2.72 lakh, plus Rs.9 lakh MIS principal.
Whole Maturity = Rs.11,72,000
XIRR = ~5.2% each year
Abstract Desk: Real looking Returns from MIS + RD Combo
| Tax Slab | Month-to-month RD Funding | RD Maturity (5 yrs @6.7%) | Whole Maturity (MIS+RD) | Real looking XIRR |
| 0% | Rs.5,550 | Rs.3.96 lakh | Rs.12.96 lakh | 7.4% |
| 5% | Rs.5,272 | Rs.3.76 lakh | Rs.12.76 lakh | 7.1% |
| 20% | Rs.4,440 | Rs.3.12 lakh | Rs.12.12 lakh | 6.2% |
| 30% | Rs.3,885 | Rs.2.72 lakh | Rs.11.72 lakh | 5.2% |
The Reality: There Is No 8.8% Return Right here
The 8.8% return determine being circulated on-line is fully fallacious.
It ignores tax, assumes incorrect compounding, and makes use of an unrealistic calculation methodology.
Right here’s what’s actual:
- MIS provides a mounted and protected month-to-month earnings, however it’s taxable.
- RD grows steadily, however once more, curiosity is taxable.
- Whenever you mix them accurately, the efficient annualized return (XIRR) ranges between 5.2% and seven.4%, relying in your tax bracket.
Even for somebody with zero tax legal responsibility, the combo doesn’t yield greater than 7.4%, which is simply the MIS price itself.
Ought to You Nonetheless Take into account This Technique?
This mix may be helpful solely in case you are on the lookout for predictable earnings and capital security — not for maximizing returns.
Appropriate for:
- Retirees or senior residents who need month-to-month earnings and security.
- Low or zero-tax people preferring assured returns.
Not appropriate for:
- Excessive-tax people (since each pursuits are taxable).
- Anybody on the lookout for inflation-beating long-term development.
For those who fall in a better tax bracket, you’ll be able to discover:
- PPF (Public Provident Fund) – 7.1% tax-free.
- SCSS (Senior Residents Financial savings Scheme) – 8.2% (taxable however larger price).
- RBI Floating Charge Bonds – round 7.05% (taxable, however linked to G-sec yield).
Ultimate Ideas
Earlier than leaping into any viral funding “hack,” all the time pause and confirm just a few issues:
- Is the curiosity taxable or tax-free?
- What’s the precise compounding frequency?
- Is the return calculation methodology (XIRR) right?
- Are the numbers lifelike or simply simplified averages?
On this case, the so-called 8.8% return is nothing however a fantasy.
The actual post-tax returns from the MIS + RD combo will vary between 5.2% to 7.4%, relying in your tax state of affairs.
So sure, this can be a protected and regular mixture, however not a high-return funding. All the time deal with post-tax, actual returns — as a result of that’s what really issues to your wealth.
