Post Office Scheme: If you’re looking for a safe and guaranteed return investment, the Post Office Recurring Deposit (RD) could be an excellent option. This scheme encourages the practice of small savings, with a substantial amount deposited into your bank account upon maturity. This post office scheme, also known as the National Savings Recurring Deposit Account, is particularly beneficial for those who prefer to make small monthly savings rather than investing a large lump sum.
Interest rate and tenure
The term of a Post Office Recurring Deposit (RD) is 5 years, or 60 months. However, it can be extended for another 5 years. Currently, this scheme offers an interest rate of 6.7% per annum. The government adjusts these interest rates every three months. However, once an account is opened, the interest rate remains fixed for the entire term. Therefore, this scheme is considered risk-free.
What are the rules of investment?
- In this scheme, an account can be opened with a minimum investment of just Rs 100 per month.
- There is no maximum investment limit in the scheme. Investors can deposit any amount per month as per their convenience.
- Any Indian can open a Post Office Recurring Deposit (RD) account, and joint account facilities are also available.
- Account can also be opened in the name of children above 10 years of age.
- Keep one thing in mind, if you do not deposit the monthly installment on time, you may have to pay a penalty.
How much return will you get in 5 years if you deposit Rs 50,000 per month?
Suppose an investor deposits Rs 50,000 every month for 5 years at an interest rate of 6.7% per annum, then the calculation will be something like this-
Monthly deposit amount – Rs 50,000 (Rs 6 lakh annually)
Investment period – 5 years
Total Deposit – Rs 30,00,000
Annual interest rate – 6.7% (compounding)
Total interest earned – Rs 5,68,291
Final earnings – Rs 35,68,291
Benefits of RD scheme
- This is a government scheme, so the deposit amount and returns are guaranteed.
- Interest is calculated every three months, giving the investor the benefit of ‘interest on interest’ and the fund growing faster.
- This account can be opened in any post office across the country.
- Facility to avail loan up to 50% of the deposit amount is also available after 1 year of account opening.
- The account can also be closed after 3 years from the date of opening with certain conditions.
- Post Office RD is an ideal option for investors who want to create a large corpus from a small amount in a fixed period of time.
