Post Office Scheme: This Post Office scheme is a gift from Goddess Lakshmi; you will receive 2.12 lakh in just 5 years..
If you wish to save a portion of your earnings each month but are unable to invest a large lump sum, the Post Office Recurring Deposit (RD) scheme could be useful for you. In this scheme, you are required to deposit a fixed amount every month. Through these small, regular savings, you can build a substantial fund over a period of five years. A key advantage is that this scheme is free from the market volatility risks associated with the stock market, making it an excellent option for those who prefer safe investments.
You can think of a Post Office RD as a savings jar—with the added benefit that the money you deposit earns interest. If you make your monthly deposits regularly, you will receive your total accumulated savings along with the accrued interest upon maturity. Furthermore, should you need funds unexpectedly, the scheme offers the facility to take a loan against your account. Let’s explore how this scheme works and the kind of corpus you can build by investing in it.
What is a Post Office RD, and how does it work?
A Post Office Recurring Deposit is a savings scheme that requires you to deposit a fixed amount every month. It has a tenure of five years, or 60 months. You can determine the monthly installment amount based on your income and financial needs.
You can start investing in this account with as little as ₹100 per month. Thereafter, you can increase the amount in multiples of ₹10. There is no upper limit on the investment amount, meaning you can deposit as much as you wish, according to your financial capacity. The interest on this account is compounded quarterly. You earn interest on your deposits, and that interest, in turn, earns further interest. This process enhances your total returns over the five-year tenure.
How much will you receive by depositing ₹1,000 every month?
With a Post Office RD, you can build a significant fund even by starting with small amounts. For instance, suppose you deposit ₹1,000 every month. Over five years, your total deposit will amount to ₹60,000. Calculated at an annual interest rate of 6.7%, you could receive approximately ₹71,000 upon maturity—meaning you would earn about ₹11,000 in interest.
Alternatively, if you deposit ₹3,000 every month, you will invest a total of ₹1.80 lakh over five years. At an annual interest rate of 6.5%, you could receive approximately ₹2,12,972 upon maturity, with about ₹32,972 coming from interest.
₹1,000 | 6.7% | ₹60,000 | ₹71,000 | ₹11,000
₹3,000 | 6.5% | ₹1,80,000 | ₹2,12,972 | ₹32,972
Note: These are estimated figures.
Need funds midway? You can take a loan
One advantage of a Post Office Recurring Deposit (RD) is that you are not forced to close your account if you need money; it offers the facility to take a loan. However, to be eligible, you must have made regular monthly deposits for at least 12 consecutive months. After one year of regular deposits, you can borrow up to 50% of the amount accumulated in your account. The interest rate on this loan is 2% higher than the interest rate applicable to the RD account. For example, if the RD earns 6.7% annual interest, the loan will carry an annual interest rate of 8.7%. This allows you to access funds when needed while continuing your savings.
Who can open an RD account?
Anyone can open a Post Office RD account. Parents can open accounts in the names of their young children. Children aged 10 years or older can operate their own accounts. Additionally, up to three individuals can open a joint account. You can visit your nearest post office to open an account.
Key Benefits of Post Office Schemes
Secure Savings: As part of the government's small savings schemes, these investments are free from the risks associated with market fluctuations.
Low Initial Amount: You can begin saving with as little as ₹100 per month.
Loan Facility: After making installment payments for one year, you become eligible to take a loan against the account.
A Post Office Recurring Deposit (RD) can be an excellent option for those who wish to build a specific fund over five years by saving a small amount each month. However, before you begin investing, be sure to check with the post office regarding the applicable interest rate and the current rules of the scheme.
Disclaimer: This content has been sourced and edited from News18 Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.