Introduction
The Post Office Recurring Deposit (RD) Scheme is one of the most secure and reliable investment options for individuals looking to build a disciplined saving habit.
Backed by the Government of India, this scheme offers attractive returns through quarterly compounding, ensuring steady growth of your savings.
In this article, we will explore the features, benefits, and investment opportunities under this scheme. Additionally, we’ll provide a detailed table showcasing the maturity value of different monthly investments over five years.
What is the Post Office RD Scheme?
The Post Office RD Scheme is a small savings scheme that allows you to invest a fixed amount every month for a tenure of five years. It is designed for individuals who want to build their savings with minimal risk while earning a decent return on investment.
Key Features of the Post Office RD Scheme
- Interest Rate:
The current interest rate is 6.7% per annum, compounded quarterly. This ensures that your investment grows consistently over time. - Flexible Monthly Deposits:
- Minimum Deposit: ₹100 (in multiples of ₹10).
- Maximum Deposit: No upper limit, making it suitable for both small and large investors.
- Tenure:
Fixed tenure of 5 years (60 months). - Risk-Free Investment:
Being government-backed, this scheme is one of the safest investment options in India. - Premature Withdrawal and Loan Facility:
- Withdrawal: Allowed after 3 years, but partial only.
- Loan Facility: You can take a loan of up to 50% of the deposited amount after 12 months.
- Eligibility:
- Indian residents, including minors (with a guardian).
Advantages of Investing in the Post Office RD Scheme
- Guaranteed Returns: The interest rate is fixed and guaranteed by the government.
- Compounded Growth: Quarterly compounding helps maximize your returns.
- Systematic Saving: Promotes financial discipline by requiring monthly deposits.
- Tax Benefits: Though the interest is taxable, the principal is not subject to Tax Deducted at Source (TDS).
- No Market Risk: Ideal for risk-averse investors.
Monthly Investment and Maturity Value Table
The table below shows the maturity value for different monthly investment amounts after five years, calculated at an interest rate of 6.7% per annum:
| Monthly Investment (₹) | Tenure (Years) | Total Deposits (₹) | Maturity Value (₹) |
| 1,000 | 5 | 60,000 | 70,169 |
| 2,000 | 5 | 1,20,000 | 1,40,338 |
| 5,000 | 5 | 3,00,000 | 3,50,845 |
| 10,000 | 5 | 6,00,000 | 7,01,690 |
How the Maturity Value is Calculated?
The Post Office RD Scheme uses quarterly compounding to calculate the maturity value. The formula for calculating the maturity is:
M = R × [(1 + i)^n – 1] / (1 – (1 + i)^(-1/3))
Where:
- M = Maturity Value
- R = Monthly Deposit
- i = Quarterly Interest Rate (Annual Interest Rate ÷ 4)
- n = Total Number of Quarters (5 years = 20 quarters)
For example, if you invest ₹1,000 per month:
- Interest Rate (Quarterly): 6.7% ÷ 4 = 0.01675
- Tenure: 5 years = 20 quarters
Using the formula, the maturity value for ₹1,000 per month comes to approximately ₹70,169.
Recurring Deposit Calculator
Results:
Total Investment (Rs.): 0.00
Interest Earned (Rs.): 0.00
Maturity Amount (Rs.): 0.00
Who Should Invest in the Post Office RD Scheme?
- Individuals looking for a risk-free and disciplined saving option.
- Parents saving for their child’s education or marriage.
- Those aiming to build a corpus for emergencies or future expenses.
How to Open a Post Office RD Account?
- Visit the Nearest Post Office:
Submit a filled application form and necessary documents like ID proof, address proof, and passport-sized photographs. - Online Opening:
If you have a savings account in a post office, you can also open an RD account through India Post's online portal or mobile app. - Modes of Payment:
- Deposits can be made through cash, cheque, or automatic deduction from a linked savings account.
Conclusion
The Post Office RD Scheme is a trusted and secure way to achieve your financial goals. Whether you're planning for your child’s education, a family vacation, or a safety net for emergencies, this scheme offers consistent growth and guaranteed returns.
Start your financial growth journey today by investing in the Post Office RD Scheme.