Post Office scheme: While there are many investment options available today, when it comes to safe and reliable investments, Post Office savings schemes are at the forefront. These government-backed schemes are not only safe but also offer stable returns with a fixed interest rate. One such popular scheme is the Post Office Recurring Deposit (RD) scheme, where you can build a substantial corpus in just five years by depositing a small amount every month.

What is the Post Office RD scheme?

The Post Office Recurring Deposit scheme is a regular savings scheme in which investors deposit a fixed amount every month. The tenure of this scheme is five years, or 60 months. Currently, this scheme offers an annual interest rate of 6.7 percent, which is compounded every month. This means that you will not only earn interest on your investment but also additional interest on that interest.

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If a person deposits Rs 25,000 every month, they will invest a total of Rs 1.5 million over five years. This will generate interest of approximately Rs 2.84 lakh, and a total of Rs 17,84,148 upon maturity. This scheme is fully guaranteed by the government, making investments in it completely safe.

Who can open an account?

The Post Office RD scheme is available to every Indian citizen. It can be opened as a single account, a joint account, or by a guardian in the name of a minor. The special feature of this scheme is that investments can be started with a minimum of Rs 100 per month, with no maximum limit. In the event of the investor’s death, the entire amount and interest deposited in the account is transferred to the nominee. The heir can continue the account or withdraw the funds if they wish. This feature makes the scheme even more reliable.

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Keep these things in mind

It is mandatory to deposit funds into the RD account before the due date every month. If an installment is deposited late, a penalty of Re 1 per 100 rupees is levied. Therefore, timely payments are essential. Also, make sure to make a nomination on the account so that the heir can easily receive the funds in case of an emergency. If someone needs money, a loan can be taken against the RD account after one year. There is also the option to close it prematurely after three years.