The Post Office Recurring Deposit (RD) scheme is a boon for those who want to build a large corpus while staying away from the fluctuations of the stock market. In today’s uncertain times, when bank FD rates are unstable, this post office scheme not only protects your capital but also offers guaranteed interest.
Understanding how a small monthly savings of just ₹5,000 can become a substantial corpus of ₹8.54 lakh in 10 years is crucial for every employed person and small saver. In this article, we will closely analyze the scheme’s mathematics, interest rates, and impressive benefits.
Government Protection and Guaranteed Returns
The Post Office RD scheme is fully administered by the central government, which means there’s zero risk of losing your money. This scheme is ideal for those who want to accumulate a substantial amount over the long term by saving small amounts each month. You don’t need to deposit a large lump sum; instead, you can start investing by withdrawing a small portion of your monthly income.
Currently, the government offers an annual interest rate of 6.7 percent on this scheme. The biggest strength of this scheme is its compounding. Interest is calculated quarterly, allowing your money to grow much faster than a regular bank savings account.
Investing ₹5,000 and having a corpus of ₹8.54 lakh
If you deposit ₹5,000 every month into this RD scheme, you’ll have a substantial corpus after the first maturity period of 5 years. But the real magic begins when you extend the scheme for another 5 years. Over a total investment period of 10 years, you’ll have a total of ₹600,000 from your pocket.
With an interest rate of 6.7% and quarterly compounding, you earn a profit of ₹2,54,272 in interest alone. This brings your total maturity amount to ₹8,54,272 after 10 years. This fund can provide a solid foundation for planning your children’s higher education, their marriage, or your retirement.
Post Office RD vs. Other Savings Options
Post Office RDs are superior to bank FDs or ordinary savings accounts in many ways. While bank FDs require a large lump sum deposit, RDs allow you to start with just ₹100. Bank interest rates often fluctuate depending on the market, but this Post Office scheme guarantees a stable and secure return. Furthermore, investing in a post office means that your capital is directly backed by the Government of India, which is paramount in terms of security.
Account Opening Process
Opening an RD account at a post office is very easy. You can open this account by visiting any nearby post office and completing your KYC process. It also offers a nomination facility, ensuring your family doesn’t face any difficulties receiving the money after you leave. If you urgently need money, you can take a loan of up to 50% of your deposit after one year. To open this account, you must have an Aadhaar card, a PAN card, and a passport-size photo. This account can be opened individually or as a joint account between two adults.