Nowadays, with inflation continuously increasing, the biggest concern of the common investor is the safety of savings and returns. The stock market is risky, and the interest offered on bank FDs is no longer as attractive as before. In this situation, the post office fixed deposit scheme is fulfilling the expectations of the people.

Depositing 2.5 lakhs gives returns of more than 1 lakh

When most people hear the word FD, they immediately think of bank FDs, but the post office also has a similar scheme called Time Deposit. The biggest difference is that the post office FD is directly guaranteed by the central government. This means that the investment is completely safe and there is no risk of losing your money.

What is Post Office Time Deposit?

Post office FDs are officially called Post Office Time Deposits. In this scheme, the investor deposits a fixed amount of money for a specific period and gets the money back at maturity along with a fixed interest rate. The scheme is available for 1 year, 2 years, 3 years and 5 years, which allows investors to choose an option according to their needs.

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Current Interest Rates:

Currently, the interest rates on Post Office Time Deposits are fixed for different tenors. Even short-term FDs offer a decent return. The highest interest is offered on 5-year FDs. This is why those who want to invest for a long term are preferring this option.

How much return will you get on investing Rs 2 lakh?

If an investor deposits Rs 2 lakh in a 5-year Post Office FD and earns an interest rate of 7.5 percent per annum, the maturity value after five years reaches around Rs 2.89 lakh. In this way, the investor can get a direct and assured profit of around Rs 90,000 without any risk.

Essential options for small investors:

For those who do not want to lock their money for a long period, the Post Office also offers 1-year, 2-year and 3-year Fixed Deposit (FD) options. Although the interest rates on these schemes are slightly lower, they prove to be better than many bank fixed deposits in terms of safety and stability.

Important tax information:

The 5-year Post Office Fixed Deposit is eligible for tax benefits under Section 80C of the Income Tax Act. However, the interest earned on fixed deposits is taxable, and if the interest amount exceeds a certain limit, tax at source (TDS) may be deducted. It is essential to understand the tax rules before investing.

Why are Post Office Fixed Deposits reliable?

The biggest advantage of Post Office Fixed Deposits is its government guarantee. Also, the interest rates are reviewed by the Ministry of Finance every three months, which further increases the confidence of investors that their money is in safe hands.