For those seeking a safe, low-risk way to save money through small daily contributions, the Post Office Recurring Deposit (RD) scheme is an excellent option. This 5-year investment plan allows you to grow your savings significantly, turning a daily saving of ₹100 into a total maturity amount of ₹2,14,097. Here’s how it works and why it’s a smart choice for risk-averse investors.
What is the Post Office RD Scheme?
The RD scheme offered by post offices operates like a piggy bank, but with added benefits. Unlike a traditional piggy bank, which only provides savings, an RD account pays interest on your deposits. It’s an ideal investment option for those who prefer making small, consistent savings without taking any financial risks.
How to Save ₹2,14,097 in 5 Years
If you save ₹100 daily, you’ll save ₹3,000 each month. By investing this amount into the Post Office RD scheme, here’s how your savings will grow:
- Monthly Deposit: ₹3,000
- Yearly Deposit: ₹36,000
- Total Deposit in 5 Years: ₹1,80,000
- Interest (at 6.7% annually): ₹34,097
- Total Maturity Amount (after 5 years): ₹2,14,097
By saving just ₹100 daily, you’ll accumulate a significant amount in 5 years with the added advantage of interest earnings.
Key Features of the Post Office RD Scheme
- Minimum Investment: An RD account can be opened with just ₹100 per month.
- No Maximum Limit: There is no upper limit for investment.
- Tenure: The RD scheme runs for 5 years.
- Interest Rate: Currently, the scheme offers an annual interest rate of 6.7%.
- Compound Interest: Interest is compounded quarterly, maximizing returns.
Option to Extend the RD Account
After the initial 5-year term, you can extend your RD account for another 5 years. During the extension period:
- The same interest rate applicable at the time of account opening will continue.
- The account can be closed at any time during the extension period.
- Interest for full years will be paid at the RD rate, while for incomplete years (less than one year), interest will be paid at the post office savings account rate (currently 4%).
For example, if you close the extended account after 2 years and 6 months, interest for 2 years will be calculated at 6.7%, while for the remaining 6 months, interest will be paid at 4%.
Early Closure Rules
If needed, you can close your RD account before the 5-year maturity period, but only after the account has been active for at least 3 years. However, if you close the account early, the interest will be calculated at the rate applicable for post office savings accounts (currently 4%).
Why Choose the Post Office RD Scheme?
The Post Office RD scheme is an excellent way to cultivate a habit of regular savings. With no risk and guaranteed returns, it’s perfect for individuals who prefer financial stability and consistent growth. Start today with as little as ₹100 and watch your small savings turn into a significant sum in just 5 years.
