New Delhi: Everyone dreams of investing in a way that builds a substantial fund for the future. If you are looking for an investment opportunity, the Post Office Recurring Deposit (RD) scheme is an excellent option. It does not require a large lump-sum investment. By depositing a fixed amount every month, you can easily accumulate a significant fund over a period of 5 years. The Post Office Recurring Deposit scheme currently offers an annual interest rate of 6.7%. Notably, with a monthly instalment of ₹6,000, you could accumulate approximately ₹4.28 lakh, a sum that could prove to be a great financial boon.
How much interest will you earn?
The Post Office Recurring Deposit scheme currently offers an annual interest rate of 6.7%. For a monthly instalment of ₹6,000 over a 5-year tenure, the estimated interest earned is approximately ₹68,000. Consequently, with a total principal investment of ₹3.60 lakh plus the estimated interest, the maturity amount can reach around ₹4.28 lakh. The actual amount will depend on the prevailing rules and interest rates.
In the Recurring Deposit scheme, interest is calculated on a quarterly compounded basis. This means interest is calculated every three months. Under these rules, you benefit from the effect of “interest on interest.” This is why the maturity amount is higher than your total principal investment. It is advisable to verify the current interest rate and the specific rules of the Post Office when opening an account.
What is the tenure of an RD?
The standard tenure for a Post Office Recurring Deposit is 5 years, or 60 months. You are required to deposit an instalment regularly every month. If you wish to continue making small savings over a longer period, this scheme can be highly beneficial for you. Before opening an account, be sure to calculate your monthly income and expenses so that you do not face any difficulty in paying your instalments.
What should you do if an instalment is delayed?
In a recurring deposit, it is essential to pay your instalments on time every month. If, for any reason, you fail to pay an instalment by the due date, you may be required to pay a late fee, in accordance with the applicable rules. Furthermore, missing instalments repeatedly can make it difficult to keep the account in good standing. Therefore, before opening an account, ensure you understand the instalment due dates and the rules regarding late payments.
