Want to create a big fund from small savings without any risk? Know how you can create ₹2,14,097 in 5 years by saving ₹100 daily in Post Office RD. Understand the complete calculation, interest rate and rules.
We all want to save money and create a big fund, but often we don’t understand where to start. The risk of the stock market scares us and we don’t have a large amount to invest at once. If you have the same problem, then a great scheme of the post office is for you. This scheme is like a “piggy bank” in which you have to invest a fixed amount every month, but you also get a good interest on it.
We are talking about Post Office Recurring Deposit (Post Office RD). This is a risk-free investment option in which you can save a small amount every day and save a large amount. Let’s know how you can create a fund of more than ₹ 2 lakh by investing just ₹ 3,000 per month.
What is Post Office RD Scheme?
Post Office Recurring Deposit (RD) is a small savings scheme backed by the Government of India, meaning your money is 100% safe. In this, you have to deposit a fixed amount every month for 5 years. It is great for those who cannot invest a lump sum but want to get into the habit of making small savings every month. It keeps your savings disciplined and also gives a fixed interest on it.
By saving ₹100 every day you can save ₹2,14,097, understand how
Your daily savings: ₹100
Your monthly savings (investment): ₹100 x 30 days = ₹3,000 per month
Investment period: 5 years (i.e. 60 months)
Total investment: ₹3,000 x 60 months = ₹1,80,000
Current interest rate: 6.7% p.a. (Interest is compounded quarterly)
Interest income: In 5 years, you will earn a total interest of ₹34,097
Total amount on maturity: ₹1,80,000 (your investment) + ₹34,097 (interest) = ₹2,14,097
| Description | Amount |
| Everyday Savings | ₹100 |
| Monthly RD Installment | ₹3,000 |
| Investment period | 5 Years (60 Months) |
| Total Deposit Amount | ₹1,80,000 |
| Applicable interest rate | 6.7% (annual) |
| Total Interest Benefit | ₹34,097 |
| Total amount received on maturity | ₹2,14,097 |
Rules for withdrawing money before time
In case of emergency, you can close your RD before time. You can close it after completion of 3 years from the date of opening the account. But if you break the RD even a day before maturity, you will not get the 6.7% interest applicable on RD. Instead, you will be given interest according to the interest rate applicable on the post office savings account (which is currently 4%). So try to run it for the full 5 years.
What is the rule regarding extended account
If you do not need the money after 5 years, you can extend your RD for another 5 years. On extension, you will continue to get the same Post Office RD Interest Rate which was applicable at the time of opening the account. You can close the extended account anytime. You will get RD interest on the number of complete years and Post Office savings account interest (4%) on the remaining months. That means if you close it after three and a half years, you will get 6.7% interest for 3 full years, while for the remaining six months you will get 4% interest.
Frequently Asked Questions (FAQs)
1. What is the minimum amount one can start investing in Post Office RD?
You can open an RD account in the post office with just ₹ 100 per month. There is no maximum limit of investment in this.
2. Is there tax on interest earned on RD?
Yes, the interest earned from RD is added to your annual income and is taxed as per your tax slab.
3. What if you forget to deposit the RD installment in any month?
If you do not deposit the installment on time, you will have to pay a penalty of ₹ 1 per ₹ 100. If you do not deposit 4 installments in a row, your account may be closed.
4. Who can open a Post Office RD account?
Answer: Any Indian citizen can open this account. You can also open it in the name of your child (minor account) or two people together (joint account).
5. How to open RD account?
Answer: You can easily open an RD account by visiting any post office near you, filling a form and submitting KYC documents (Aadhaar and PAN card).
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