Investing in a Post Office Scheme is one of the safest ways to grow your money, as it is backed by the Government of India. With the right investment strategy, you can turn a small amount like Rs 1,000 into Rs 1 lakh over time. In this article, we will explain how you can achieve this goal, the best post office schemes to invest in, and provide a detailed calculation breakdown.
Understanding the Post Office Savings Schemes
The Post Office Savings Scheme offers multiple investment options for individuals looking for secure and guaranteed returns. Some of the most popular schemes include:
1. Post Office Recurring Deposit (RD)
- Interest Rate: 6.7% (as of 2024)
- Investment Tenure: 5 years
- Compounding Frequency: Quarterly
Example Calculation: If you invest Rs 1,000 per month for 5 years in an RD account, your total deposit will be Rs 60,000, and the maturity amount will be around Rs 70,270 at the end of 5 years.
2. Post Office Monthly Income Scheme (POMIS)
- Interest Rate: 7.4% per annum
- Investment Tenure: 5 years
- Best for: Generating fixed monthly income
Example Calculation: If you invest Rs 1 lakh, you will earn Rs 7,400 per year (Rs 616 per month) for 5 years. After the completion of the tenure, you get your principal amount back.
3. Public Provident Fund (PPF)
- Interest Rate: 7.1% (compounded annually)
- Investment Tenure: 15 years (with an option to extend in blocks of 5 years)
- Tax Benefits: Exempt under Section 80C
Example Calculation: If you invest Rs 1,000 per month in PPF for 15 years, the amount grows to Rs 3.25 lakh due to annual compounding.
4. Time Deposit (TD) or Fixed Deposit (FD)
- Interest Rate: Up to 7.5% per annum for a 5-year FD
- Compounding: Quarterly
- Best for: Secure and fixed returns over a specific tenure
How to Get Rs 1 Lakh by Investing Rs 1,000?
To turn Rs 1,000 into Rs 1 lakh, you need to strategically invest in long-term post office schemes. Here’s how:
Step 1: Choose the Right Investment Plan
- If you want steady monthly income, go for POMIS.
- If you want long-term growth, choose PPF or RD.
- If you need guaranteed returns, opt for a 5-year TD.
Step 2: Start Early & Be Consistent
- The power of compounding works best over time.
- Invest at least Rs 1,000 per month consistently.
Step 3: Reinvest & Maximize Growth
- Reinvesting interest earned from POMIS into RD or PPF can increase overall returns.
- Consider extending PPF beyond 15 years for better compounding effects.
Step 4: Monitor Your Investments
- Check the interest rates annually (they change quarterly).
- Use an online Post Office RD/PPF calculator to estimate future returns.
Step 5: Withdraw at the Right Time
- PPF gives highest long-term growth but has a 15-year lock-in.
- RD provides 5-year compounding benefits, making it a great mid-term option.
Post Office Scheme (FAQs)
1. Which is the best post office scheme for Rs 1,000 investment?
For long-term growth, PPF is the best option due to tax benefits and compounding effects. If you want mid-term growth, RD or TD is recommended.
2. How much will Rs 1,000 per month grow in a post office RD after 5 years?
With 6.7% interest, Rs 1,000 per month for 5 years will become around Rs 70,270.
3. Can I withdraw my post office RD before 5 years?
Yes, but there is a penalty and lower interest rate applicable on premature withdrawals.
