Investing in a Post Office Recurring Deposit (RD) is a smart way to grow your savings with guaranteed returns and minimal risk. If you invest Rs 2,500 per month, you might be surprised at how much your money can grow over 60 months (5 years). Let’s break it down and see how much you can earn!
What is the Post Office Recurring Deposit (RD) Scheme?
The Post Office RD is a savings scheme backed by the Government of India. It allows individuals to deposit a fixed amount every month for a fixed tenure (usually 5 years), earning compound interest over time. This makes it an excellent choice for people looking for safe, steady, and guaranteed returns on their savings.
Why Choose Post Office RD?
Here are some reasons why the Post Office RD is a great investment:
- Safe & Secure: It is backed by the Indian government, making it a risk-free investment.
- Guaranteed Returns: The interest is compounded quarterly, ensuring better growth than simple interest schemes.
- Flexible Investment: You can start with as little as Rs 100 per month (multiples of Rs 10).
- Easy Withdrawals & Loans: You can take a loan against your RD after one year or close it prematurely in case of emergency.
- Best for Disciplined Saving: Helps individuals build a habit of regular savings.
How Much Will You Earn by Investing Rs 2,500 Per Month?
If you invest Rs 2,500 every month in the Post Office RD for 60 months, here’s what your earnings would look like:
Investment Breakdown
- Monthly Deposit: Rs 2,500
- Total Investment (5 years): Rs 1,50,000
- Interest Rate: 6.8% (compounded quarterly)
- Total Interest Earned: Rs 58,961.54
- Final Maturity Amount: Rs 2,08,961.54
How is Interest Calculated?
The interest in Post Office RD is compounded quarterly, which means every three months, your interest is calculated on the principal plus previously earned interest. Here’s the formula used:
A = P × (1 + r/n)^(nt)
Where:
- A = Maturity amount
- P = Monthly deposit
- r = Annual interest rate (6.8% = 0.068)
- n = Number of times interest is compounded per year (4 for quarterly)
- t = Number of years
Step-by-Step Guide to Open a Post Office RD
Opening a Post Office RD account is simple and hassle-free. Follow these steps:
1. Visit Your Nearest Post Office
Go to any post office and ask for an RD account opening form.
2. Fill in the Application Form
Provide your personal details, nominee details, and investment amount.
3. Submit Required Documents
You will need:
- Aadhaar Card (Identity proof)
- PAN Card (For tax purposes)
- Passport-size photographs
- Address Proof (Utility bill, bank passbook, etc.)
4. Deposit Your First Installment
Make your first payment in cash, cheque, or online transfer (if your post office allows it).
5. Get Your Passbook
Once your account is active, you will receive an RD passbook to track your deposits and interest earned.
Who Should Invest in Post Office RD?
- Salaried individuals who want to develop a habit of saving systematically.
- Students who want to build their savings for future education.
- Self-employed professionals looking for a safe investment option.
- Senior citizens who prefer risk-free investments over volatile markets.
- Housewives who want to invest their savings for future needs.
Post Office RD (FAQs)
1. Can I open multiple RD accounts in the Post Office?
Yes, you can open multiple RD accounts in the same or different post offices.
2. Is there a penalty for missing an RD installment?
Yes, a penalty of Rs 1 per Rs 100 per month is charged for delayed deposits.
3. Can I increase my monthly deposit amount later?
No, once fixed, the monthly deposit cannot be changed. However, you can open another RD account for a higher amount.
4. Can I withdraw my RD before 5 years?
Yes, after 3 years, but you will earn a lower interest rate.
