Savings schemes in India have always been popular among people looking for secure and guaranteed returns. If you, too, want to save systematically and earn attractive returns, the Post Office Recurring Deposit (RD) Scheme could be an excellent choice for you. This scheme not only encourages regular savings but also provides a substantial return after 5 years.
What is the Post Office RD Scheme?
The Post Office Recurring Deposit (RD) Scheme is a savings plan offered by the Indian Postal Department. It allows individuals to invest a fixed amount every month and earn interest on it. This scheme is particularly suitable for those who want to save regularly for the future.
Key Features:
- Minimum Deposit: ₹100 per month.
- Tenure: 5 years (60 months).
- Interest Rate: Currently 6.5% per annum (with quarterly compounding).
- Secure and guaranteed returns.
How Much Will You Earn by Investing ₹80,000?
If you deposit ₹1,333 every month into the Post Office RD scheme, your total investment over 5 years will amount to ₹80,000. At the current interest rate of 6.5% with quarterly compounding, the maturity amount will be approximately ₹1,02,728 after 5 years.
Detailed Calculation:
- Monthly Deposit: ₹1,333.
- Total Duration: 60 months.
- Total Principal: ₹80,000.
- Interest Earned (6.5% with quarterly compounding): ₹22,728.
- Maturity Amount: ₹1,02,728.
Benefits of the Post Office RD Scheme
- Secure Investment Option:
- Backed by the Government of India, this scheme ensures the safety of your money.
- Guaranteed Returns:
- The fixed interest rate offers predictable returns, helping you plan your financial goals better.
- Start Small:
- You can start investing with as little as ₹100 per month, making it accessible for everyone.
- Flexibility:
- Accounts can be opened at any post office, and partial withdrawals are allowed if needed.
- Nomination Facility:
- You can nominate a beneficiary when opening the account.
How to Open a Post Office RD Account?
- Visit the Nearest Post Office:
- Go to your nearest post office branch.
- Fill Out the Application Form:
- Complete the RD account opening form.
- Submit Required Documents:
- Provide identity proof (Aadhaar Card, PAN Card) and address proof.
- Deposit the Initial Amount:
- Make the first monthly deposit to activate your account.
- Receive Account Details:
- After processing, you will receive your account number and passbook.
The Importance of Quarterly Compounding
One of the biggest advantages of the Post Office RD Scheme is the quarterly compounding of interest. This means that the interest earned every three months is added to the principal amount, and the next quarter’s interest is calculated on the increased amount. This significantly boosts your savings over time.
Who Should Invest in the Post Office RD Scheme?
- Small Investors:
- Ideal for individuals who cannot make large one-time investments.
- Middle-Class Families:
- Perfect for those looking to save regularly for future needs.
- Salaried Individuals:
- Great for people who want to allocate a portion of their monthly income towards savings.
- Parents:
- Suitable for parents planning for their children’s education or marriage.
Premature Withdrawal Facility
In case of emergencies, you can withdraw money from your RD account before the maturity date. However, certain conditions apply:
- Premature withdrawal is allowed only after completing 1 year.
- The withdrawn amount will earn interest at a slightly lower rate.
Post Office RD vs. Other Savings Schemes
| Feature | Post Office RD | Bank RD | Mutual Funds |
|---|---|---|---|
| Risk | Very Low | Low | High |
| Interest Rate | 6.5% | 5-7% | Market-dependent |
| Guarantee | Yes | Yes | No |
| Tax Benefits | No | No | Under 80C for ELSS |
Conclusion
The Post Office RD Scheme is an excellent savings option for individuals looking for secure and guaranteed returns. By investing ₹1,333 per month, you not only save ₹80,000 over 5 years but also earn an attractive maturity amount of ₹1,02,728. This scheme is perfect for fostering financial discipline and achieving your long-term savings goals. Visit your nearest post office today and start your journey towards financial security.