Currently, the stock market is constantly going up and down. As a result, many investments related to the stock market now seem risky. In this situation, government schemes that provide safe and stable returns have become popular among the general public. In particular, middle-class and working people, who want to create a safe fund for their future, are considering the Post Office Recurring Deposit (RD) scheme as a reliable option.

The biggest strength of this scheme is that it is backed by the Government of India, so investing in it is completely safe. Not only for savings, but many are also using this scheme to collect a large fund for their children’s education, buying a house or planning for retirement. Now let’s find out how to create a fund of Rs 14 lakh in five years in the Post Office RD scheme.

And the scheme is popular among investors

The best part of the Post Office RD scheme is that it does not require a large amount of money to start it. Anyone can open an account with just Rs 100 per month. After that, the monthly installment can be increased as per the ability. This is why this scheme is becoming popular among small investors as well as big investors. In fact, many consider it a method of disciplined savings, where the amount deposited every month turns into a large fund in the future.

How much interest is being earned?

Currently, Post Office RDs offer an annual interest rate of around 6.7 percent, which increases based on quarterly compounding. Quarterly compounding is a special feature of this scheme. Due to compounding interest, small monthly deposits seem like a lot after five years.

Understand the calculation of a fund of Rs 14 lakh

For example, if a person deposits Rs 20,000 every month in an RD, their total investment in five years will be around Rs 12,00,000. Combining the 6.7 percent interest rate and the compounding facility, the total amount at maturity reaches around Rs 14,28,727. This means that even simple and regular savings can build a strong fund of over Rs 14 lakh in just five years. This fund will generate a total return of Rs 2,28,727.

What is the loan facility?

One of the most effective features of Post Office RD is the loan facility. Investors can take a loan against their deposit if required. The biggest advantage of this facility is that they do not have to close their RD to take a loan. Sometimes, money is suddenly needed, but it is not wise to break the investment. In such a situation, this loan option in RD provides considerable relief. This facility is especially suitable for those who want to continue investing for a long time and do not want to be forced to withdraw money in the medium term.

This scheme is also very beneficial for tax savings. Investment in Post Office RD is tax-deductible under Section 80C of the Income Tax Act. Therefore, those who want to save money along with investing in terms of taxes must include this scheme in their financial planning. This feature makes it more attractive.

A safe scheme for the future

The Post Office RD scheme is a very effective and stable scheme for long-term goals. If one is aiming for their children’s education, their marriage, buying a house, retirement or creating an emergency fund, then RD can be a strong option. Small amounts deposited regularly can turn into a significant fund over the years, which helps in fulfilling future plans.

The process of opening an account under this scheme is also very simple. You just need to visit your nearest post office branch and open an account with your Aadhaar card, PAN card, two photographs and an initial deposit of Rs 100. After this, if the monthly installments are automatically deposited, the investment continues without any hassle and the person can easily reach his/her goal.

Conclusion

If you are worried about market fluctuations and are looking for a scheme with safe, stable and assured returns, then the Post Office RD scheme is a great option. Starting with a small amount of money, this scheme can create a significant investment in five years. Compound interest, loan facilities, tax exemptions and government protection make this scheme one of the most reliable investment schemes. Therefore, if you take it up with regular savings and discipline, this scheme can play a significant role in making you financially strong in the future.