The Post Office offers a variety of savings schemes catering to every age group and financial need, ensuring both safety and high returns. One of the most attractive options is the Post Office Recurring Deposit Scheme (RD), which allows you to turn a modest monthly investment into a substantial corpus over time.

Post Office Recurring Deposit: A Safe and Rewarding Investment

Many individuals are keen on saving money but want their investments to be secure while providing good returns. The Post Office Small Saving Schemes, including the Post Office Recurring Deposit (RD), are some of the most trusted and lucrative options available. With an initial investment of just ₹5,000 per month, you can accumulate a fund of ₹8 lakh in 10 years. Moreover, this scheme also offers the convenience of loans on your investment.

Attractive Interest Rate on Post Office RD

In 2023, the Indian government increased the interest rates on Post Office Recurring Deposit Schemes, benefiting investors. As of the October-December 2023 quarter, the rate of interest stands at 6.7%. It's important to note that the interest rates for Post Office Small Saving Schemes are revised every quarter, with the last update taking place on September 29, 2023.

How to Grow ₹5,000 a Month into ₹8 Lakh

Let’s break down how you can accumulate ₹8 lakh with a consistent investment of ₹5,000 per month:

• Initial Investment (5 years): If you invest ₹5,000 every month in the Post Office RD, you will contribute ₹3,00,000 over a period of 5 years.
• Interest Earned: At the current interest rate of 6.7%, you will earn ₹56,830 as interest, bringing the total amount to ₹3,56,830 after 5 years.

Now, here’s the best part: you don’t have to stop here. By extending your Post Office RD account for another 5 years, you can grow your investment even further.

• Extended Investment (Next 5 years): Your total deposit after 10 years will be ₹6,00,000.
• Interest on Extended Investment: At the same 6.7% rate, you will earn an additional ₹2,54,272 as interest, bringing your total fund value to ₹8,54,272 after 10 years.

Loan Facility: Access Funds When You Need Them

Another advantage of the Post Office RD Scheme is the loan facility. Once your RD account has been active for at least one year, you can take a loan of up to 50% of your accumulated balance. The interest rate on this loan is 2% higher than the current RD interest rate. This means if your RD interest rate is 6.7%, the loan interest rate would be 8.7%.

Key Features of the Post Office RD Scheme

1. Starting Investment: You can open an account with as little as ₹100.
2. Maturity Period: The standard RD tenure is 5 years, but you can extend it for another term to continue earning interest.
3. Premature Closure: If necessary, you can close your RD account after 3 years.
4. Loan Option: After one year, you can borrow up to 50% of the amount you have invested.

Conclusion

The Post Office Recurring Deposit Scheme is an excellent way to grow your savings over time, with guaranteed returns and the flexibility to borrow against your investment if needed. With an initial investment of just ₹5,000 a month, you can build a substantial fund of over ₹8 lakh in 10 years, making it an ideal choice for safe, long-term savings.