Post Office Recurring Deposit Scheme: How Investing Rs 1,500 Monthly Can Build Your Wealth

The Post Office Recurring Deposit (RD) Scheme is a secure, government-backed investment offering 6.70% annual interest. By investing ₹1,500 monthly, you can accumulate ₹1,05,093 in 5 years. This scheme ensures guaranteed returns, loan facilities, and flexibility, making it a great savings plan for investors seeking financial security. Read this detailed guide to learn how to open an RD account, calculate returns, and maximize your savings.

By Praveen Singh
Published on
Post Office Recurring Deposit Scheme: How Investing Rs 1,500 Monthly Can Build Your Wealth
Post Office Recurring Deposit Scheme

Investing in a secure and stable financial scheme is a priority for many individuals, especially those looking for guaranteed returns without the risk of market fluctuations. One such trusted investment is the Post Office Recurring Deposit (RD) Scheme. If you invest ₹1,500 every month in this scheme, you can accumulate a substantial amount over time.

Post Office Recurring Deposit Scheme

FeatureDetails
Scheme NamePost Office Recurring Deposit (RD) Scheme
Monthly Investment₹1,500
Interest Rate6.70% per annum (Compounded Quarterly)
Tenure5 Years (60 Months)
Total Investment₹90,000
Maturity Amount₹1,05,093
Total Interest Earned₹15,093
Official WebsiteIndia Post

If you are looking for a low-risk, high-security investment with guaranteed returns, the Post Office RD scheme is an excellent choice. A disciplined investment of ₹1,500 per month can help you accumulate ₹1,05,093 in just 5 years.

What is the Post Office Recurring Deposit Scheme?

The Post Office RD Scheme is a savings plan offered by India Post that allows individuals to invest a fixed amount monthly. The deposited amount earns quarterly compounded interest at 6.70% per annum (as of March 2025). The scheme is designed to help small investors develop a disciplined savings habit while ensuring guaranteed returns.

see also: Post Office FD Start Investing from ₹5 Lakh and Get ₹15,24,149

How Much Will You Earn by Investing ₹1,500 Monthly?

To understand the returns, let’s calculate the maturity amount for a ₹1,500 monthly investment for five years:

Formula Used for RD Calculation:

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 Installment (₹1,500)
  • i = Interest Rate per Quarter (6.70% annually = 1.675% per quarter)
  • n = Number of Quarters (5 years × 4 = 20 quarters)

Using this formula, the final maturity amount will be ₹1,05,093, which includes ₹15,093 in interest earnings over five years.

Breakdown of Investment and Returns

YearTotal DepositedInterest EarnedTotal Amount Accumulated
1₹18,000₹1,123₹19,123
2₹36,000₹4,725₹40,725
3₹54,000₹9,612₹63,612
4₹72,000₹13,890₹85,890
5₹90,000₹15,093₹1,05,093

Step-by-Step Guide to Opening a Post Office RD Account

Step 1: Visit the Nearest Post Office

You can open an RD account at any India Post branch. Some post offices also provide an online account opening facility.

Step 2: Fill Out the RD Account Opening Form

Provide the necessary details, such as your name, address, nominee details, and deposit amount.

Step 3: Submit Required Documents

You need to submit the following documents:

  • Aadhaar Card (Identity & Address Proof)
  • PAN Card (For tax compliance)
  • Passport-sized Photographs
  • Initial Deposit Amount

Step 4: Choose Payment Mode

You can make payments through cash, cheque, or online banking (if your post office supports it).

Step 5: Start Investing Monthly

Once your account is active, deposit ₹1,500 every month before the due date. Missing payments can lead to penalties.

Advantages of Investing in the Post Office RD Scheme

Safe & Secure Investment

Unlike stock markets, the Post Office RD is government-backed, ensuring zero risks.

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Attractive Interest Rate

With a 6.70% annual interest rate, it offers better returns than most savings accounts.

Flexible Investment Amount

You can start investing with as little as ₹100 per month.

Loan Facility Available

After 12 months, you can take a loan of up to 50% of your deposited amount.

Option to Extend the RD Beyond 5 Years

You can extend your RD for an additional 5 years and keep earning compound interest.

see also: Post Office FD How Your Money Grows and When It Doubles?

Post Office Recurring Deposit FAQs

1. Can I Withdraw My RD Amount Before Maturity?

Yes, premature withdrawal is allowed after 3 years, but you’ll earn a lower interest rate.

2. What Happens if I Miss a Monthly Deposit?

A default fee of ₹1 per ₹100 is charged for each missed installment. If you miss deposits for 4 consecutive months, your account may be closed.

3. Is the Interest Earned on RD Taxable?

Yes, the interest earned is taxable under “Income from Other Sources”. However, no TDS is deducted unless the interest exceeds ₹40,000 in a financial year.

4. Can I Open Multiple RD Accounts?

Yes, you can open multiple RD accounts in your name or on behalf of your children/spouse.

5. Is There Any Online Option for RD Deposits?

Yes, if you have an India Post Internet Banking Account, you can deposit online.

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