Are you looking for a safe and reliable way to grow your money in India? Look no further than the Post Office Recurring Deposit ( Post Office RD) scheme!
Post Office RD’s popular savings option offers a perfect blend of security, guaranteed returns, and flexibility, making it ideal for individuals with various financial goals.
Post Office RD Scheme
Are you looking for a government-backed fixed-income scheme that offers complete security for your money? If so, then the Post Office RD Scheme might be the right fit for you.
This scheme is administered by India Post and offers an interest rate of 6.7% per annum (as of June 30, 2024).
While the scheme originally had a maturity period of five years, it allows for premature withdrawal after the first three years.
The minimum monthly investment starts at Rs. 100 and increases in multiples of Rs. 10. This means you can invest anywhere between Rs. 5,000 and Rs. 20,000 per month in this small savings scheme.
Let’s now explore some examples to see how much your income could be based on your investment amount.
What is a Post Office RD?
A Post Office RD (National Savings Recurring Deposit Account) is a government-backed savings scheme that allows you to deposit a fixed amount of monthly money for a chosen tenure.
This inculcates a disciplined savings habit and helps you accumulate a substantial corpus over time. The deposits earn interest at a predetermined rate, compounded quarterly, for enhanced returns.
Post Office RD Account
The Post Office RD account allows for monthly deposits. It is also known as the Five-Year Post Office Recurring Deposit Account. The interest rate is variable and is determined by the government.
The rate changes quarterly. As per the India Post website, the interest rate applicable to Post Office Recurring Deposit Accounts for the June 30, 2024 quarter is 6.7 percent per annum.
| Name of the Scheme | Post Office RD Scheme |
|---|---|
| Website | National Savings RR Account |
How Does Post Office RD Scheme Work?
According to the Post Office website, here are three important things to know about the Post Office RD scheme:
a) Investment Limit
There is a minimum monthly investment of Rs. 100. You can set up an account with this initial deposit. No maximum limit exists, so you can deposit any amount in multiples of Rs. 10.
b) How to Open an Account
You can open an RD account at any post office by paying the initial cash or cheque. Subsequent deposits need to be made by the 15th of every month.
If the last working day of the second month falls within the first fortnight, the deposit deadline is the 15th. Otherwise, it is the 16th.
c) Maturity Period and Premature Withdrawal
The corpus (total amount) built up in your RD account can be withdrawn early only after three years from the opening date. You must submit a prescribed application form at your local post office branch to do this.
However, if you choose early withdrawal, you will only earn interest at the Post Office Savings Account rate on the total amount. The RD account can be extended for another five years after maturity.
Investment Options and Maturity Amounts
This describes three investment options with varying monthly investment amounts and their corresponding maturity values at different timeframes (3rd, 4th, and 5th year).
a) Monthly Investment: Rs. 5,000
- Total corpus if withdrawn at the end of the 3rd year: Rs. 67,492
- Total corpus if withdrawn at the end of the 4th year: Rs. 70,192
- Total corpus if kept till full maturity (5th year): Rs. 3,56,829
b) Monthly Investment: Rs. 12,000
- Total corpus if withdrawn at the end of the 3rd year: Rs. 1,61,980
- Total corpus if withdrawn at the end of the 4th year: Rs. 1,68,460
- Total corpus if kept till full maturity (5th year): Rs. 8,56,390
c) Monthly Investment: Rs. 20,000
- Total corpus if withdrawn at the end of the 3rd year: Rs. 2,69,967
- Total corpus if withdrawn at the end of the 4th year: Rs. 2,80,766
- Total corpus if kept till full maturity (5th year): Rs. 14,27,317
Key Features and Benefits of Post Office RD
- Safety and Security: Backed by the Government of India, Post Office RD accounts are one of the safest investment options in the country.
- Guaranteed Returns: Unlike market-linked instruments, Post Office RDs offer fixed interest rates, providing certainty on your earnings.
- Flexible Tenure: Choose a deposit term that aligns with your financial goals, ranging from 12 months to 120 months (10 years).
- Minimum Investment: Start saving with as little as Rs. 100 per month, making it accessible to everyone.
- Compound Interest: Earn interest on your interest, accelerating your wealth accumulation over time.
- Rebate on Advance Deposits: Get rewarded for depositing a lump sum in advance for a period of 6 months or more.
- Loan Facility: Avail a loan against your RD account after a specific period, meeting short-term financial needs.
- Tax Benefits: Interest earned on Post Office RDs is partially taxable under the Income Tax Act.
How to open a Post Office RD?
Opening a Post Office RD account is simple.
- Visit your nearest post office branch with your KYC documents and fill out the application form.
- Choose your desired deposit amount, tenure, and nomination details (optional).
- Deposits can be made in cash or cheque.
Conclusion
A Post Office RD is a dependable and advantageous savings scheme for individuals seeking a safe and steady way to grow their money.
With its accessibility, guaranteed returns, and flexible features, it caters to a wide range of financial needs. So, start your savings journey with a Post Office RD today and secure your financial future!