If you’re looking for a safe and guaranteed way to grow your savings, the Post Office Recurring Deposit (RD) Scheme might be one of the best options out there. Many investors ask — Can I get ₹20 lakh from Post Office RD in just 5 years? The short answer is: yes, you can. But to reach that goal, you’ll need to invest smartly and consistently every month.
Get ₹20 Lakh in 5 Years from Post Office RD
| Feature | Details |
|---|---|
| Target Amount | ₹20,00,000 |
| Timeframe | 5 years |
| Required Monthly Deposit | Approximately ₹29,000 |
| Total Investment in 5 Years | ₹17,40,000 |
| Interest Earned | Around ₹2,60,000 |
| Interest Rate (as of April 2025) | 6.7% per annum (compounded quarterly) |
| Scheme Type | Small Savings Scheme (Government-backed) |
| Official Website | India Post RD |
If you want a low-risk, high-discipline savings plan, the Post Office RD is an excellent choice. And yes — you can indeed grow ₹20 lakh in just 5 years if you’re able to invest around ₹29,000 every month. It’s ideal for people who prefer stable returns without the ups and downs of the market.
What is Post Office RD Scheme?
The Post Office Recurring Deposit (RD) is a government-backed small savings scheme that allows individuals to deposit a fixed amount every month for a period of 5 years. The money earns interest compounded quarterly, and the total corpus is paid out at maturity.
This scheme is ideal for:
- Salaried individuals looking for low-risk investments.
- First-time investors seeking disciplined savings.
- Parents saving for children’s education or marriage.
- Anyone wanting a guaranteed return without market risks.
see also: Is It Beneficial or Harmful to Repay Home Loan Before Time?
Can You Really Get ₹20 Lakh in 5 Years from Post Office RD?
Yes, it’s possible — if you deposit around ₹29,000 every month.
Let’s break down how it works:
Interest Rate Used for Calculation
- Current Interest Rate (April–June 2025): 6.7% per annum, compounded quarterly
Monthly Investment Required
To reach a maturity amount of ₹20 lakh, you’ll need to deposit approximately:
- ₹29,000 per month for 60 months (5 years)
Breakup of Total Returns
- Total Deposited Amount: ₹29,000 × 60 = ₹17,40,000
- Total Interest Earned: ₹2,60,000
- Maturity Value: ₹17,40,000 + ₹2,60,000 = ₹20,00,000
How Post Office RD Interest is Calculated
The interest in a Post Office RD is compounded quarterly, meaning interest is added to your account every three months. This allows your deposits to grow faster over time.
Formula Used
M=R×(1+i)n−11−(1+i)−1/3M = R \times \frac{(1 + i)^n – 1}{1 – (1 + i)^{-1/3}}
Where:
- M = Maturity amount
- R = Monthly deposit
- i = Interest rate per quarter (annual rate ÷ 4)
- n = Number of quarters (60 months = 20 quarters)
You can also use the official India Post RD calculator or any online RD calculator to estimate your exact returns.
Benefits of Post Office RD Scheme
Guaranteed Returns
The scheme is backed by the Government of India, making it one of the safest investment options available.
Affordable for All
You can start with as little as ₹100 per month, making it suitable for people from all walks of life.
Quarterly Compounding
Interest is compounded every quarter, which helps grow your savings faster than simple interest accounts.
Easy to Open
You can open an RD account at any post office branch across India, either individually or jointly.
Eligibility and Documents Required
Who Can Open an RD Account?
- Any Indian resident above 18 years
- Minors above 10 years in their name
- Guardians on behalf of minors
Documents Needed
- ID Proof (Aadhaar Card, PAN Card, Passport)
- Address Proof
- Passport-size photograph
- Initial deposit amount
How to Open a Post Office RD Account
You can open a Post Office RD in 2 ways:
Option 1: Visit a Post Office
- Visit your nearest Post Office branch.
- Fill out the RD Account Opening Form (Form A).
- Submit KYC documents.
- Deposit the first monthly installment.
Option 2: Online via India Post Payment Bank (IPPB)
- Download the IPPB app.
- Create your account and link it with your Post Office savings account.
- Navigate to RD section and start the process.
- Set up monthly auto-debit for convenience.
Things to Keep in Mind Before Investing
Taxation
- The interest earned is fully taxable under your income slab.
- There is no TDS (Tax Deducted at Source) on RD interest.
Premature Closure
- You can prematurely close the account after 3 years.
- Interest will be paid at the Savings Account rate if closed early.
Loan Against RD
- You can avail a loan of up to 50% of the balance after 1 year.
Default Penalty
- If you miss a monthly deposit, a ₹1 penalty per ₹100 is levied.
see also: Post Office New Scheme 2025: Big Profit in Less Investment
Alternatives to Post Office RD
If you’re considering other options to achieve a ₹20 lakh goal in 5 years, here are some popular alternatives:
| Scheme | Interest Rate (Apr 2025) | Tenure | Lock-in Period |
|---|---|---|---|
| PPF (Public Provident Fund) | 7.1% | 15 years | Yes |
| NSC (National Savings Certificate) | 7.7% | 5 years | No |
| Bank RD (Private/Public Banks) | 6.5% to 7.25% | Varies | No |
| SIP in Mutual Funds | 10–14% (market-linked) | Flexible | No |
Note: Mutual Funds carry market risk, whereas Post Office RD is risk-free.
Get ₹20 Lakh in 5 Years from Post Office RD FAQs
Q1. Is Post Office RD safe?
Yes, it is backed by the Government of India, making it one of the safest investment instruments.
Q2. Can I invest ₹29,000 per month in a Post Office RD?
Yes, there’s no upper limit to your monthly investment as long as it’s in multiples of ₹10.
Q3. Is the interest earned taxable?
Yes, the interest is fully taxable as per your income tax slab. However, no TDS is deducted.
Q4. Can NRIs invest in Post Office RD?
No, Non-Resident Indians (NRIs) are not allowed to invest in this scheme.
Q5. What if I miss a monthly payment?
A penalty of ₹1 per ₹100 is charged. If you miss 4 consecutive payments, the account is discontinued, but can be revived.
