For regular income, look to the Senior Citizen Savings Scheme

You can park the quarterly interest in your post office savings account and withdraw it every month if you wish to.

If you are above 60 and are looking for regular cash flows, the Post Office Senior Citizen Savings Scheme is a clear winner at this juncture.

With a return of 9.3 per cent per annum for five years and a tax deduction of up to Rs 1 lakh, the scheme will ensure that you earn returns that beat inflation. Inflation averaged at 7 per cent in the last five years.

This scheme allows you to invest up to Rs 15 lakh of your savings.

You can consider parking the quarterly interest in your post office savings account and withdraw it every month if you wish to.

Post office savings account will fetch 4 per cent in FY-13. That's about what many banks pay on your savings account today.

If you are somebody who values safety above all else, the post office account should be your first option as your bank deposits (including your savings account) are insured only up to Rs 1 lakh in a bank.

Currently most banks too offer this rate but remember the rates may fall in the months to come and you may be unable to lock-in to bank rates right away if you do not have a surplus.

The Senior Citizen scheme, though, will keep the rate unchanged for investments made up to March 2013.

Hence, if you are investing a lump sum later this year, compare the bank rates against the 9.3 per cent that you will get in post office.

MONTHLY INCOME SCHEME

If you are not a senior citizen and still want a monthly income option, do look for bank deposits that offer a monthly interest payout. Current interest rates on deposits of five to ten years is mostly 9.25 per cent. That is higher than the 8.5-per cent interest rate that a post office Monthly Income Scheme (MIS) will offer.

MIS makes for a good option only for those in the 10 per cent tax bracket.

Some of the deposits offered by credit worthy companies, with a monthly or quarterly payout option, are also a good bet for a five-year period. But ensure you don't hold over 10 per cent of your debt portfolio in company deposits as they can be a risky proposition.

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