Post Office RD Scheme: The Post Office RD is considered an excellent option for those looking to invest in government-guaranteed savings schemes. Many people don’t want to invest a lump sum or have only a small amount of savings each month. For such individuals, recurring deposits are the safest and easiest way. Even with a small amount, you can build a substantial corpus by regularly saving. The interest earned on Post Office RD is stable, so it is not affected by market fluctuations. This makes the scheme very popular for those seeking a secure investment over a long period.
Who can open an account?
This Post Office scheme is available to all Indian citizens. Any adult can open an account alone. Three adults can also open a joint account. Minors above ten years of age can operate the account themselves, while a guardian can open an account for a mentally disabled person. This flexibility makes this scheme particularly useful for families and small investors.
How much can investors invest?
The most important feature of Post Office RD is that the minimum deposit amount is only ₹100. However, there is no maximum investment limit. This facility is beneficial for those who want to increase their savings according to their capacity. Currently, Post Office RD offers an interest rate of 6.7%, which is considered attractive in the safe investment category.
Option to Extend Maturity Period
The original term of a Post Office RD is five years, or 60 months. Investors can extend this term by another five years. During this extended term, they can choose to continue making deposits or simply receive interest on the deposit amount. After three years, there is also an option to prematurely close the account. However, if the account is closed before maturity, the interest rate is at the same rate as a savings account, so this option should be used judiciously.
Loan Facility Also Available
Investors can also avail a loan facility on the amount deposited in RD. A loan of up to 50% of the RD balance can be availed after one year of account opening or after twelve monthly instalments have been deposited. This amount can be repaid in a lump sum or in instalments, making this account a financial support in times of emergency.
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How to Build a Fund of ₹25 Lakh
If both husband and wife work and save ₹7,500 per month, they can each make a ₹15,000 deposit. When the account matures after five years, it can be extended for another five years. Thus, by continuously depositing ₹15,000 monthly for ten years, a total of ₹25,62,822 is accumulated. This amount includes ₹18 lakh as investment, while ₹7,62,822 is earned as interest. This amount is an example of building a good fund in a safe and long-term manner.