If you want to start investing but do not have a large lump sum available, then there is no need to worry. Post Office’s Recurring Deposit (RD) scheme can be a reliable and safe option for you.
This scheme is especially for those people who want to create a big fund for the future by saving a fixed amount every month. In this, not only your money is safe, but being backed by the government, it also gives good returns.
What is the Post Office RD scheme?
Post Office RD is a 5-year deposit scheme in which you can start investing with a minimum of ₹ 100 every month. Currently, it is offering an interest rate of 6.7% per annum, which is compounded on a quarterly compounding basis. There is no maximum investment limit in this scheme.
How to create a fund of lakhs from small savings?
Suppose you deposit ₹21,000 every month in a post office RD.
So after 5 years i.e. 60 months, you will get a total return of about ₹14,98,682.
Total Deposit: ₹12,60,000
Total Interest Earned: ₹2,38,682
This calculation shows how you can build a large corpus through regular small savings.
If you extend it for 5 more years, the returns can be close to double.
The most special thing about this scheme is that you can extend this account for another 5 years after maturity. If you continue investing for 10 years, your investment and interest will be as follows:
Total Investment Amount: ₹25,20,000
Interest Income: ₹10,67,944
Total Return: ₹35,87,944
In this, you not only keep the principal amount safe but also earn a good amount of interest.
– Loan facility is also available.
If you need money in between, you can take a loan of up to 50% of your investment after completion of one year of the account and depositing 12 installments. The interest rate on this loan will be – RD interest rate + 2%.
Why is this scheme special?
– Government backed and safe
– Guaranteed returns with fixed interest rate
– Opportunity to create a big fund with small investment –
Option to carry forward the account after maturity
– Loan facility available on investment
