Post Office Fixed Deposit: In the recent past, the interest rates on Fixed Deposit (FD) have been increased by banks, which has made it more attractive for those seeking fixed income.
After the recent hike in interest rates, now fixed deposits have become an inflation-beating option after a long time. A good way to build a strong FD portfolio is to include short and long term FDs in your portfolio instead of investing all your money in a single scheme. Invest a portion in a 5-year FD, where tax benefits are available under section 80C of the Income Tax Act.
While keeping in mind the liquidity, invest the remaining money in different short term FDs. If you want to do this, then you can go for the time deposit scheme of the post office, where 4 options of different tenures will be merged together.
1 year to 5 years option
The time deposit scheme of the post office is a type of fixed deposit. There is an option to do FD of 1 year, 2 years, 3 years and 5 years. Up to 7.5 percent annual interest is being received in these different tenure schemes. Investors who do not want to take market risk at all and are looking for stable returns while keeping their deposits safe, then the post office time deposit scheme is a better option.
1 year TD: 6.8% interest per annum
Deposit: Rs 10 lakh
Tenure: 1 year
Interest: 6.8% per annum
Maturity Amount: Rs 10,69,754
Interest lost: Rs 69,754
2 year TD: 6.9% interest per annum
Deposit: Rs 10 lakh
Tenure: 2 years
Interest: 6.9% per annum
Maturity Amount: Rs 11,46,625
Interest lost: Rs 1,46,625
3 years TD: 7% interest per annum
Deposit: Rs 10 lakh
Tenure: 3 years
Interest: 7% per annum
Maturity Amount: Rs 12,31,439
Interest lost: Rs 2,31,439
5 year TD: 7.5% interest per annum
Deposit: Rs 10 lakh
Tenure: 5 years
Interest: 7.5% per annum
Maturity Amount: Rs 4,49,948
Interest lost: Rs 3,83,000
Features and benefits of the scheme
- It has the facility to open single and joint accounts. There can be 3 adults in a joint account.
- The special thing about this scheme is that an investor can open multiple accounts.
- On depositing at least Rs 1000, an account can be opened in any post office. There is no limit on the maximum deposit.
- In this scheme, the benefit of tax exemption is available on the investment made for 5 years.
- Keeping the account as security, you can also take a loan instead.
- There is no risk due to being a government deposit.
- Account can be transferred from one post office to another post office.
Safer than bank FD
It is a safer investment than bank FDs, as it provides government guarantee on the investor’s capital and the interest earned. Whereas, in bank FD, you get protection only up to a maximum amount of Rs 5 lakh on capital and interest as per the rules of Deposit Insurance and Credit Guarantee Corporation (DICGC).
Facilities available at Post Office TD
- Nomination facility at Post Office TD
- Facility to transfer account from one post office to another
- Facility to open multiple TDs in same post office
- Facility to convert single account to joint or joint account to single
- Account extension facility
- Online account opening facility through intra operable netbanking / mobile banking
