Post Office Scheme: The Post Office Savings Scheme is a safe and reliable investment plan backed by the Government of India. Many people are looking for ways to grow their savings securely, and the Post Office Recurring Deposit (RD) Scheme is an excellent option. With just Rs 1,000 per month, you can accumulate a substantial corpus, even reaching Rs 1 lakh or more over time. But how does this work? Let’s break it down in an easy-to-understand way.
Understanding the Post Office RD Scheme
The Post Office Recurring Deposit Scheme is a government-backed savings plan that allows individuals to deposit a fixed amount every month and earn interest on it. The interest is compounded quarterly, which means you earn interest not only on your principal but also on the accumulated interest.
How Does the Rs 1,000 to Rs 1 Lakh Concept Work?
If you invest Rs 1,000 per month, the compounding effect helps your money grow exponentially. Here’s a simple calculation:
- 5-Year Investment: Rs 1,000 per month x 60 months = Rs 60,000
- Interest Earned: Approx. Rs 11,469
- Total Maturity Value: Rs 71,469
If you continue for another 5 years, your investment grows even further:
- 10-Year Investment: Rs 1,000 per month x 120 months = Rs 1,20,000
- Interest Earned: Approx. Rs 50,857
- Total Maturity Value: Rs 1,70,857
By maintaining consistency and reinvesting your savings, you can comfortably reach Rs 1 lakh or more in a few years.
Benefits of the Post Office RD Scheme
1. Safe & Secure Investment
Since this scheme is backed by the Government of India, it offers complete capital protection with zero risk.
2. Attractive Interest Rates
Currently, the interest rate is 6.7% per annum (compounded quarterly). This rate is higher than most savings accounts and provides stable growth over time.
3. Small Monthly Contributions
You can start with as little as Rs 100 per month, making it affordable for everyone, from salaried professionals to students.
4. Tax Benefits
While the interest earned is taxable, the scheme itself falls under Section 80C tax benefits if you invest in related Post Office Time Deposits.
5. Flexible Withdrawal & Loan Facility
- Premature Withdrawal: Allowed after 3 years but with a penalty.
- Loan Against RD: After 12 months, you can take a loan up to 50% of your balance.
Step-by-Step Guide to Open a Post Office RD Account
Opening a Post Office RD Account is simple and hassle-free. Follow these steps:
Step 1: Visit Your Nearest Post Office
Find your nearest India Post branch and ask for an RD account opening form.
Step 2: Fill Out the Form
Provide basic details such as name, address, PAN card, and Aadhaar card.
Step 3: Attach Necessary Documents
- Identity Proof: Aadhaar, PAN, or Passport
- Address Proof: Utility bills or Aadhaar
- Passport-size Photographs
Step 4: Make Your First Deposit
Deposit at least Rs 100 (or your chosen amount) and receive a passbook.
Step 5: Set Up Auto-Debit (Optional)
To ensure timely payments, link your RD to your bank account for auto deductions.
(FAQs)
1. Can I withdraw money before maturity?
Yes, but only after 3 years. Early withdrawal attracts a penalty.
2. Is there a penalty for missing an installment?
Yes, a penalty of Rs 1 for every Rs 100 is charged for each delayed installment.
3. Can I extend my RD beyond 5 years?
Yes, you can extend it in blocks of 5 years.
4. Is my investment taxed?
Yes, interest earned is taxable under your income tax slab.
