Can You Actually Earn 8.8%?

Social media claims Publish Workplace MIS + RD offers 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 sensible trick to earn greater returns from Publish Workplace schemes. One such viral concept doing the rounds is —

“Put money into the Publish Workplace Month-to-month Revenue 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 often is.

So, let’s break down this declare utilizing the precise Publish Workplace rates of interest for Oct–Dec 2025perceive 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 Revenue 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% per 12 months (as per Basunivesh.com Publish Workplace Curiosity Charges Replace).
• You obtain Rs.9,00,000 × 7.4% ÷ 12 = Rs.5,550 per thirty days 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 important to manually use or reinvest that month-to-month earnings.

Publish 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 + collected curiosity.

RD is good for many who need 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:

1. Make investments Rs.9,00,000 in MIS.
2. Obtain Rs.5,550 per thirty days as curiosity.
3. Deposit Rs.5,550 each month right into a 5-year RD (incomes 6.7%).
4. After 5 years, get Rs.9 lakh (MIS maturity) + Rs.3.9 lakh (RD maturity).
5. Whole maturity = Rs.12.9 lakh.
6. Therefore, 8.8% return!

At first look, it appears to be like completely logical. However while you dig deeper, you’ll notice it’s mathematically flawed. Let’s see why.

Why This Calculation is Flawed

1. It Ignores Taxes

Each MIS and RD curiosity are totally taxable underneath “Revenue from Different Sources.”
In case 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 Publish Workplace scheme (aside from PPF or Sukanya Samriddhi) offers tax-free curiosity.

• It Assumes Month-to-month Compounding for RD

That is the commonest mistake in viral calculations.
Publish Workplace RD compounds quarterlynot month-to-month.
Which means each three months, the curiosity is added to the steadiness — not each month. Therefore, the maturity quantity shall be decrease than what these viral posts declare.

• It Makes use of Easy Averages As an alternative of XIRR

Whenever you make investments at totally different instances (like each month into an RD), you can not simply add up whole returns and divide by the variety of years.
The right technique to discover the true annualized return is through the use of the XIRR (Prolonged Inner 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 eventualities:

1. Zero tax legal responsibility
2. 5% slab
3. 20% slab
4. 30% slab

Frequent Assumptions

• MIS Curiosity Charge: 7.4%
• RD Curiosity Charge: 6.7% (quarterly compounding)
• Period: 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 complete 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 Xirrit really works out to round 7.4% per 12 months.

So, for somebody who pays zero tax, this combo roughly equals the MIS charge itself. There’s no “further magic” occurring right here — the 8.8% declare is just flawed.

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 lakhand also you get again Rs.9 lakh from MIS.

Whole Maturity = Rs.12,76,000
Xirr = ~ 7.1% per 12 months

Case 3: 20% Tax Slab

After 20% tax, your reinvestment falls to Rs.4,440/month.

Your RD matures at roughly Rs.3.12 lakhand MIS principal of Rs.9 lakh is returned.

Whole Maturity = Rs.12,12,000
Xirr = ~ 6.2% per 12 months

Case 4: 30% Tax Slab

After 30% tax, you possibly can reinvest solely Rs.3,885/month.

Your RD matures at roughly Rs.2.72 lakhplus Rs.9 lakh MIS principal.

Whole Maturity = Rs.11,72,000
Xirr = ~ 5.2% per 12 months

Abstract Desk: Life like Returns from MIS + RD Combo

The Reality: There Is No 8.8% Return Right here

The 8.8% return determine being circulated on-line is utterly flawed.
It ignores tax, assumes incorrect compounding, and makes use of an unrealistic calculation methodology.

Right here’s what’s actual:

• MIS offers a mounted and secure month-to-month earningsnevertheless 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 responsibilitythe combo doesn’t yield greater than 7.4%which is simply the MIS charge itself.

Ought to You Nonetheless Take into account This Technique?

This mix could be helpful solely if you’re searching 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 searching for inflation-beating long-term progress.

In case you fall in the next tax bracket, you possibly can discover:

• PPF (Public Provident Fund) – 7.1% tax-free.
• SCSS (Senior Residents Financial savings Scheme) – 8.2% (taxable however greater charge).
• RBI Floating Charge Bonds – round 7.05% (taxable, however linked to G-sec yield).

Last Ideas

Earlier than leaping into any viral funding “hack,” all the time pause and confirm a number of issues:

1. Is the curiosity taxable or tax-free?
2. What’s the precise compounding frequency?
3. Is the return calculation methodology (XIRR) right?
4. Are the numbers reasonable 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 scenario.

So sure, it is a secure and regular mixturehowever 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.