If you’re looking to build a safe ₹10 lakh corpus by saving ₹5000 per month, the Post Office Recurring Deposit (RD) Scheme could be a great option. With guaranteed returns, government backing, and quarterly compounding interest, this scheme is perfect for risk-averse investors seeking stable long-term growth.
In this guide, we’ll break down exactly how long it takes to get ₹10 lakh by investing ₹5000 monthly, how Post Office RD interest works, and what other Post Office schemes can help you reach that goal faster. Whether you’re a salaried professional, a retiree, or a parent planning for your child’s future, this article gives you everything you need to make a smart financial move.
Post Office Great Scheme
| Feature | Details |
|---|---|
| Scheme Name | Post Office Recurring Deposit (RD) |
| Monthly Investment | ₹5,000 |
| Interest Rate (Apr–Jun 2025) | 6.7% p.a. (compounded quarterly) |
| Maturity Amount in 5 Years | ₹3,49,600 approx. |
| Time to Reach ₹10 Lakh | ~12.5 years |
| Compounding Type | Quarterly |
| Government Backed? | Yes |
| Early Withdrawal | Allowed with penalty |
| Official Link | India Post |
The Post Office RD Scheme is a solid, government-backed option for systematic savings. By investing just ₹5000 every month, you can build a corpus of over ₹10 lakh in about 12.5 years. And with a little reinvestment planning, you can reach your goal faster using other Post Office instruments like TD, PPF, or NSC.
What is the Post Office Recurring Deposit (RD) Scheme?
The Post Office RD Scheme is a small savings investment option where you deposit a fixed amount every month for 5 years. It’s backed by the Government of India, making it a low-risk and guaranteed return investment.
This scheme is popular among Indians who want to:
- Save systematically each month
- Earn compound interest
- Avoid risks associated with the stock market
- Ensure capital protection
As of April–June 2025, the interest rate is 6.7% per annum, compounded quarterly. The rate is reviewed quarterly by the Finance Ministry.
see also: PNB RD Scheme: Start Investing from ₹100 and Get High Returns
How Will ₹5000 Per Month Grow in Post Office RD?
Let’s break down what happens when you invest ₹5000 every month into this RD account.
Calculation Example (5 Years)
- Monthly Deposit: ₹5,000
- Tenure: 5 years (60 months)
- Interest Rate: 6.7% (compounded quarterly)
Using the RD formula:
M = R × [ (1 + i)^n – 1 ] / (1 – (1 + i)^(-1/3))
Where:
- M = Maturity Value
- R = Monthly deposit (₹5,000)
- i = Interest rate per month (6.7% / 4 / 3 = ~0.005583)
- n = Number of months (60)
After calculating, the maturity amount comes to around ₹3.49 lakh in 5 years.
So, if your goal is ₹10 lakh, 5 years won’t be enough — but there’s a way to reach it.
How to Reach ₹10 Lakh With ₹5000 Monthly in Post Office RD
If you want to build a ₹10 lakh fund, you’ll need:
- More time
- Or, a higher interest rate
- Or, bigger monthly contributions
Let’s assume you stick to ₹5000/month. Here’s how long it will take:
Time Needed to Reach ₹10 Lakh
At 6.7% annual interest, with ₹5000/month, you will reach:
- ₹3.5 lakh in 5 years
- ₹7 lakh in 10 years
- ₹10 lakh in approximately 12 years and 6 months
So yes, you can build ₹10 lakh — but it will take discipline and time.
Can You Get There Faster? Alternatives to Consider
If 12.5 years sounds too long, you can combine Post Office RD with other schemes to reach your goal faster.
1. Post Office Time Deposit (TD) – 5 Year Tenure
- Current rate: 7.5% per annum
- Better for lump-sum investments
- Interest paid annually but compounded quarterly
Use RD for 5 years to accumulate around ₹3.5 lakh, then shift that into a 5-year TD, and watch it grow.
POMIS Scheme Calculator: Every Month You Will Earn 9,250 Rupees from the Post Office, Just Do This Work
2. Public Provident Fund (PPF)
- Interest rate: 7.1% p.a. (as of Apr–Jun 2025)
- Tax-free returns
- Lock-in: 15 years (but partial withdrawal allowed after 6 years)
Great for long-term goals like retirement or children’s education.
3. National Savings Certificate (NSC)
- Interest rate: 7.7% (compounded annually)
- Tenure: 5 years
- One-time investment scheme
You can invest your RD maturity into NSC for better compounded growth.
Why Choose Post Office Schemes for Your ₹10 Lakh Goal?
Post Office schemes stand out because:
- 100% Government Backing
- Safe from market volatility
- Attractive rates compared to many bank FDs
- Flexible tenures
- Accessible from over 1.5 lakh post offices across India
Also, Post Office accounts are now digital-friendly, and can be managed via India Post’s online portal or mobile app.
How to Start Investing ₹5000 Monthly
Step 1: Open a Post Office Savings Account
- Visit your nearest Post Office
- Submit KYC documents (Aadhaar, PAN, passport photo)
- Fill out Form A for RD
Step 2: Start the RD Account
- Choose your monthly deposit (₹5000)
- Choose the deposit method: cash or auto-debit
- Collect your passbook
Step 3: Track and Maintain Regular Payments
- Deposit before 15th of every month to avoid penalty
- Maintain discipline to ensure compounding works
Step 4: Maturity & Reinvestment
- After 5 years, reinvest the lump sum in TD or NSC
- Or extend RD for another 5 years to build more corpus
see also: SBI’s Highest Interest Paying FD Scheme 2025
Post Office Great Scheme FAQs
Q1. Can I open a Post Office RD account online?
Yes, you can open and manage RD accounts through India Post’s internet banking and mobile app, once you activate your online banking.
Q2. What happens if I miss a monthly deposit?
You will be charged a default fee of ₹1 per ₹100 for each missed month. Missing too many payments can result in account discontinuation.
Q3. Can I close the RD before 5 years?
Yes, but only after completing 1 year. You’ll earn interest at Post Office Savings Account rate (currently 4%), not the RD rate.
Q4. Is TDS deducted on RD interest?
No TDS is deducted by Post Office, but interest is taxable as per your income slab. You must report it while filing ITR.
Q5. Can NRIs invest in Post Office RD?
No, Non-Resident Indians (NRIs) are not eligible for Post Office small savings schemes.
