Quick answer: In October 2026 the safe options in Sri Lanka pay roughly 9–12% a year. One-year Treasury bills yielded 9.95% at the auction of 21 October, the best private-bank fixed deposits about 10%, money market unit trusts around 8.5–10%, and long Treasury bonds 11–12%. With headline inflation at 8.0% in September 2026, that leaves a thin real return. Shares had a strong 2025, when the All Share Price Index rose 41.9%. In 2026 they have been falling, down 10.8% for the year by 16 October. Gold is down from its January peak. There is no single best investment: keep an emergency buffer in savings, put money you need within a year or two into fixed deposits, Treasury bills or a money market fund, and invest only long-term money in shares.
LKIN1021The options side by side
| Option | Return, October 2026 | Risk | Access to money |
|---|---|---|---|
| Savings account | about 2.5–3% (higher on money market savings tiers) | very low, insured up to Rs. 1.1m | immediate |
| Bank fixed deposit, 12 months | about 7.25% (state banks) to 10% (private banks) | very low, insured up to Rs. 1.1m | locked; penalty if broken |
| Treasury bills | 9.20% (91 days) to 9.95% (364 days), auction of 21 Oct 2026 | government debt | 3–12 months, can be sold earlier |
| Treasury bonds | 11.00% (6 years) and 11.67% (10 years), auction of 13 Oct 2026 | government debt; price falls if rates rise | tradable before maturity |
| Money market unit trusts | about 8.5–10% annualised | low; not insured | usually 1–3 working days |
| Shares on the CSE | ASPI +41.9% in 2025, −10.8% in 2026 to 16 Oct; dividend yield about 3.3% | high | a few days to sell, at market price |
| EPF | 10.75% declared for 2025 | low | at retirement, with limited exceptions |
Figures are from the Central Bank's weekly indicators, the Public Debt Management Office auction results, fund managers' published yields and Colombo Stock Exchange market reports for October 2026. Treasury bill yields fell slightly from September, when the 182-day bill was above 10%. They are about one percentage point above the policy rate of 8.75%, which the Central Bank set in May 2026 and held at its September review. Fixed deposit rates differ a lot between banks; see our comparison of bank interest rates before choosing one.
A rule change gives bank fixed deposits an edge over Treasury bills for many savers. Interest on Treasury bills and bonds is not subject to the 10% withholding tax at source, under Circular SEC/2026/E/04 issued in 2026, so the full yield is paid out. But that income still counts in your annual return, and the first Rs. 1,800,000 of assessable income is tax-exempt for the year of assessment 2025/2026. A private-bank deposit at 10% pays about 9% after the 10% deduction. Compare the after-tax figures in our bank rate comparison before you lock money up.
Two dated rate changes matter. At the 21 October 2026 auction the 91-day bill rose 2 basis points to 9.20%, while the 364-day bill stayed at 9.95%. Fixed deposit promotions are far above the industry average: Seylan Bank advertised 10.5% for 12 months and 11.5% for 24 months as of 13 October 2026. The average one-year commercial bank deposit was only about 8.00% in early to mid-2026. A 24-month deposit at 11.5% locks in a high rate, but the penalty for breaking it early applies. Ask your bank for the maturity value in writing, not just the headline rate. Our Treasury bills guide explains the alternative.
Returns against inflation
Our comparison of the figures above. A savings account at 2.5% loses about five and a half points a year to 8% inflation, so it is a place for an emergency fund, not for savings. A state-bank deposit at 7.25% also falls short after the 10% tax on interest, which brings it to about 6.5%. Private-bank deposits, Treasury bills and money market funds roughly match or slightly beat inflation. Only long bonds and the EPF clearly beat it at today's rates. Shares can beat all of these over many years, but 2026 shows the downside: an investor who bought at the start of the year was about 11% down by mid-October. The Central Bank's 2026 financial stability review noted that from May 2026 one-year Treasury bills yielded more than the earnings yield of the share market. In other words, shares paid no extra reward for their risk at those prices.
Treasury bills and bonds
Government securities are issued electronically and registered in the Central Bank's LankaSecure depository. Individuals cannot bid at the Central Bank directly; you open an account with a licensed primary dealer or with a commercial bank's primary dealer unit and buy through it. Primary auction bids are for large amounts, so most individuals buy existing bills and bonds from a dealer at its quoted yield. Minimum amounts depend on the dealer. You need your NIC, a tax identification number and a rupee bank account. A bond paying 11–12% locks in today's rate for years, but its market price falls if interest rates rise and you need to sell early. Our guide to investing in Treasury bills walks through the steps.
Unit trusts
The unit trust industry managed about Rs. 590 billion in 89 funds at the end of August 2026, for roughly 150,000 investors. Sixteen management companies are licensed by the Securities and Exchange Commission of Sri Lanka. Money market funds were showing annualised yields of roughly 8.7% to 10% in October 2026. Management fees are typically 0.15–0.50% a year, and most money market and income funds charge no entry or exit fee. Fund assets are held by an independent trustee, usually a bank. Under SEC rules applied from April 2026, every fund must belong to one of seven categories, such as money market, income, gilt, balanced or growth, so the name tells you what it holds. Unit trusts are not deposits and are not covered by deposit insurance. Their returns are not guaranteed, but you can usually withdraw within one to three working days. Compare funds in our guide to unit trust funds in Sri Lanka.
Shares, gold and property
To buy shares you open a Central Depository System (CDS) account through a licensed stockbroker, online or on paper. On 21 October 2026 the All Share Price Index closed at 19,927 points. That is down from 21,906 on 9 March, and the market traded at about 10 times earnings. Dividends are taxed at 15% at source. Spread your money across sectors, or use an equity unit trust if you cannot follow companies yourself; our guide to investing on the Colombo Stock Exchange covers the basics. Gold peaked at about USD 1,393 per sovereign at the end of January 2026, according to the Central Bank. By the end of August it had fallen to about USD 1,141 after dropping even lower in between. It can protect against a falling rupee, but it pays no interest and its price swings. Property asking prices in Colombo reached their highest level since 2019 in 2026. Property needs large sums, is hard to sell quickly and carries transaction costs.
Risks and scams to avoid
Deposit insurance covers up to Rs. 1.1 million per depositor at each licensed bank or finance company. It does not cover unit trusts, Treasury securities or shares. Check that a finance company is on the Central Bank's list of licensed institutions before you deposit. Pyramid schemes are illegal under section 83C of the Banking Act. The Central Bank's public notice of July 2026 named 25 schemes and apps it had found to be prohibited, and the list keeps growing. Be wary of social media videos in which well-known people appear to recommend a trading platform: the Central Bank and Sri Lanka CERT have warned about AI-faked videos used to sell fraudulent crypto schemes. Cryptocurrencies are not legal tender in Sri Lanka, and in October 2026 there was still no law licensing crypto exchanges, so you have no local protection if one fails. Any offer that guarantees returns far above the Treasury bill rate is a warning sign.
Before you commit new money, ask every bank and primary dealer for a written after-tax maturity figure. Deposits carry the 10% deduction at source, while Treasury bill interest is paid gross and declared in your annual return; that difference shifts the ranking between two offers that look similar. Check the minimum ticket too: retail counters at banks often start at Rs. 10,000 to Rs. 25,000, but some primary dealers set thresholds of Rs. 250,000. If a deposit promotion beats the prevailing bill yield by a wide margin, confirm the tenure and the early-withdrawal penalty before signing. Keep the allotment advice from LankaSecure for your tax file, and keep a buffer in a savings account so you never break a fixed deposit to meet a short-term bill.