Social media claims Put up Workplace MIS + RD provides 8.8% returns. Is it true? Discover the actual post-tax XIRR and bust the parable of so-called consultants.
Each few months, new movies and social media posts declare to have “found” a wise trick to earn greater returns from Put up Workplace schemes. One such viral concept doing the rounds is —
“Put money into the Put up 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 at all times say, in private finance, if one thing sounds too good to be true, it often is.
So, let’s break down this declare utilizing the precise Put up 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.
Put up 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.
Put up 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 Put up 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 mainly an income-generating scheme. It doesn’t reinvest the curiosity — it’s a must to manually use or reinvest that month-to-month earnings.
Put up Workplace Recurring Deposit (RD)
- In RD, you make investments a hard and fast 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 whole deposits + accrued curiosity.
RD is good for many who wish to construct financial savings progressively. 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).
- Complete maturity = Rs.12.9 lakh.
- Therefore, 8.8% return!
At first look, it appears to be like completely logical. However once you dig deeper, you’ll understand it’s mathematically flawed. Let’s see why.
Why This Calculation is Unsuitable
- It Ignores Taxes
Each MIS and RD curiosity are absolutely taxable below “Earnings from Different Sources.”
When you fall in a 20% or 30% tax slab, your efficient return falls sharply.
Even if you’re within the 0% tax bracket, do not forget that no Put up Workplace scheme (aside from PPF or Sukanya Samriddhi) provides tax-free curiosity.
- It Assumes Month-to-month Compounding for RD
That is the commonest mistake in viral calculations.
Put up Workplace RD compounds quarterly, not month-to-month.
Meaning each three months, the curiosity is added to the stability — not each month. Therefore, the maturity quantity shall be decrease than what these viral posts declare.
- It Makes use of Easy Averages As a substitute of XIRR
If you make investments at completely different occasions (like each month into an RD), you can’t simply add up whole 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 Inner Charge of Return) technique, 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 eventualities:
- Zero tax legal responsibility
- 5% slab
- 20% slab
- 30% slab
Widespread 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.
Complete 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 fee itself. There’s no “further magic” occurring right here — the 8.8% declare is solely 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.
Complete 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.
Complete Maturity = Rs.12,12,000
XIRR = ~6.2% each year
Case 4: 30% Tax Slab
After 30% tax, you may reinvest solely Rs.3,885/month.
Your RD matures at roughly Rs.2.72 lakh, plus Rs.9 lakh MIS principal.
Complete Maturity = Rs.11,72,000
XIRR = ~5.2% each year
Abstract Desk: Life like Returns from MIS + RD Combo
| Tax Slab | Month-to-month RD Funding | RD Maturity (5 yrs @6.7%) | Complete Maturity (MIS+RD) | Life like 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 Fact: There Is No 8.8% Return Right here
The 8.8% return determine being circulated on-line is utterly fallacious.
It ignores tax, assumes incorrect compounding, and makes use of an unrealistic calculation technique.
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.
- If 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 fee itself.
Ought to You Nonetheless Take into account This Technique?
This mixture will be helpful solely if you’re in search of 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 in search of inflation-beating long-term development.
When you fall in a better tax bracket, you may discover:
- PPF (Public Provident Fund) – 7.1% tax-free.
- SCSS (Senior Residents Financial savings Scheme) – 8.2% (taxable however greater fee).
- RBI Floating Charge Bonds – round 7.05% (taxable, however linked to G-sec yield).
Ultimate Ideas
Earlier than leaping into any viral funding “hack,” at all times pause and confirm a couple of issues:
- Is the curiosity taxable or tax-free?
- What’s the precise compounding frequency?
- Is the return calculation technique (XIRR) appropriate?
- Are the numbers life like or simply simplified averages?
On this case, the so-called 8.8% return is nothing however a delusion.
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. At all times concentrate on post-tax, actual returns — as a result of that’s what actually issues to your wealth.
