New Delhi, Sept. 6 -- Investors often assume that spreading money across several government-backed small savings schemes makes a portfolio safer. But these products do not diversify risk in the same way as different asset classes. They largely provide a sovereign-backed fixed-income exposure, with the key differences being their purpose, tenure, tax treatment and liquidity.

"For most investors, one scheme is often enough. But the answer also depends on the problem you are trying to solve," said Anshi Shrivastava, head of personal finance training at 1 Finance.

"Small savings instruments aren't meant to be collected like stocks, and diversified for risk. Every scheme here carries the same sovereign guarantee. What separates them is purpo...