The Post Office Recurring Deposit (RD) Scheme is a secure and government-backed investment option that helps individuals build a substantial savings corpus over time. By investing just ₹5000 per month, you can accumulate over ₹8 lakh upon maturity. This article provides a detailed guide on how this superhit plan works, who can benefit from it, and how to maximize returns.
Also Check: Post Office NSC Scheme! You can make 43 lakh rupees in just 5 years, know how
What is the Post Office Recurring Deposit (RD) Scheme?
The Post Office RD Scheme is a small savings scheme designed for individuals who want to save regularly in a low-risk and stable environment. It is one of the most popular investment options in India, especially for risk-averse investors, salaried individuals, and small business owners.
How Does It Work?
- Investors deposit a fixed amount every month.
- The scheme offers a 6.7% annual interest rate, which is compounded quarterly.
- After 5 years, the investor receives the maturity amount along with the accrued interest.
This scheme is ideal for disciplined investors who want to accumulate wealth over time without exposing their capital to market risks.
How to Start Investing in Post Office RD?
Step 1: Choose Your Investment Amount
- The minimum deposit amount is ₹100 per month, but investors can choose any amount in multiples of ₹10.
- To build an ₹8 lakh corpus, it is advisable to invest at least ₹5000 per month.
Step 2: Open an RD Account
- Visit your nearest Post Office or open an account online via India Post’s website.
- Submit the KYC documents: Aadhaar Card, PAN Card, and a passport-size photograph.
- Provide an initial deposit for the first month’s contribution.
Step 3: Start Depositing Monthly
- You can make monthly deposits via cash, cheque, or automatic deductions from a post office savings account.
- Ensure timely deposits to avoid penalties.
Step 4: Monitor Your Investment
- Check your balance and interest earnings through the India Post online portal.
- Consider continuing the RD beyond 5 years to increase returns.
Step 5: Withdraw or Extend the RD
- At the end of 5 years, you can withdraw the full maturity amount or extend it for another 5 years.
- Extending the RD for 10 years can yield over ₹8.5 lakh!
Also Check: SIP Investment: Know in how many years a SIP of Rs. 10,000 will become Rs. 1 crore
How Much Will You Earn?
If you invest ₹5000 per month at an interest rate of 6.7%, here’s how your investment will grow:
| Investment Duration | Total Investment | Interest Earned | Maturity Amount |
| 5 Years (60 months) | ₹3,00,000 | ₹56,830 | ₹3,56,830 |
| 10 Years (120 months) | ₹6,00,000 | ₹2,54,272 | ₹8,54,272 |
Note: The above calculations are based on current interest rates and may vary slightly over time.
Benefits of the Post Office RD Scheme
✅ Government-Backed Security – No risk of losing money.
✅ Compounded Interest – Interest is compounded quarterly, boosting returns.
✅ Flexible Deposits – Start with as little as ₹100 per month.
✅ Loan Facility – Borrow up to 50% of the balance after 12 months.
✅ Premature Withdrawal – Allowed after 3 years with minor penalties.
✅ Higher Returns for Long-Term Investors – Extendable beyond 5 years for higher gains.
Who Should Invest in the Post Office RD Scheme?
This scheme is best suited for:
- Salaried individuals who want to build disciplined savings.
- Small business owners looking for a safe investment option.
- Retirees who prefer guaranteed returns over risky market investments.
- Parents planning for their child’s education or marriage.
Post Office Scheme (FAQs)
1. Can I withdraw money before 5 years?
Yes, you can withdraw after 3 years, but a lower interest rate will be applied.
2. Can I extend my RD beyond 5 years?
Yes! You can extend it for another 5 years, significantly increasing your returns.
3. What happens if I miss a monthly deposit?
A penalty of ₹1 per ₹100 will be charged for each missed installment.
4. Is there a tax benefit on Post Office RD?
No, the interest earned is fully taxable, and TDS is deducted if interest exceeds ₹40,000 per year.
