Investing just Rs. 900 every month in a Post Office scheme might not sound like a big step, but over time, it can grow into a solid financial cushion. If you’re someone looking for a safe, reliable, and government-backed investment, the Post Office Recurring Deposit (RD) is worth your attention. This scheme is especially popular among middle-class investors and salaried professionals who prefer low-risk investments that still offer steady returns.
The Post Office RD scheme is a fixed monthly deposit plan that allows you to build a corpus over time while earning interest. Many people are surprised to know that investing a small amount like Rs. 900 per month can earn them returns in the range of thousands to lakhs, depending on the tenure and compounding effect.
Post Office RD Scheme
| Feature | Details |
|---|---|
| Scheme Name | Post Office Recurring Deposit (RD) |
| Monthly Investment | Starts from Rs. 100 (Example: Rs. 900) |
| Interest Rate | 6.7% per annum (compounded quarterly) |
| Tenure | Fixed 5 years (60 months) |
| Total Investment (Rs. 900/month) | Rs. 54,000 over 5 years |
| Maturity Amount | Approx. Rs. 63,900 (interest ~Rs. 9,900) |
| Compounding Frequency | Quarterly |
| Official Website | India Post |
The Post Office RD scheme is one of the most trusted and convenient investment options for individuals looking to start their financial journey. With just Rs. 900 per month, you can build a habit of saving and earn a tidy sum at the end of 5 years. And if you can invest more or open multiple accounts, the returns can definitely reach into the lakhs.
What Is the Post Office RD Scheme?
The Post Office Recurring Deposit is a Government of India-backed savings scheme designed for disciplined monthly savings. It is an ideal option for those who wish to build a lump sum gradually without exposing themselves to market risks.
Key Features:
- Monthly Deposit: As low as Rs. 100; can be increased in multiples of Rs. 10.
- Guaranteed Returns: Interest is fixed and compounded every quarter.
- Safe Investment: Backed by the Government of India, ensuring security.
- Premature Closure Allowed: After 3 years with a small penalty.
- Loan Facility: Up to 50% of the balance can be borrowed after 12 installments.
see also: Those Who Invest Money in FD Should Be Careful
How Much Will You Earn by Investing Rs. 900 Monthly?
Let’s break it down:
- You invest Rs. 900 every month.
- In 12 months, that becomes Rs. 10,800.
- Over 5 years (60 months), your total contribution is Rs. 54,000.
- At 6.7% interest compounded quarterly, your investment grows to approximately Rs. 63,900.
- Interest Earned: Around Rs. 9,900.
This might not seem like “lakhs” at first glance, but if you increase your monthly contribution or invest in multiple RDs, you can build a corpus worth lakhs in a safe, disciplined manner.
Why Is This Scheme Popular?
The RD scheme’s popularity lies in its simplicity and trustworthiness:
- Suitable for All Ages: From students to retirees.
- No Market Risk: Unlike mutual funds or stocks.
- No TDS Deduction: Interest is taxable, but TDS is not automatically deducted.
- Helps Build Saving Habit: Encourages monthly discipline.
Step-by-Step Guide to Open a Post Office RD Account
Step 1: Choose Your Post Office
Visit your nearest India Post Office that offers savings schemes.
Step 2: Carry Required Documents
- Aadhar Card
- PAN Card
- Passport-size photograph
- Address proof (if not on Aadhar)
Step 3: Fill and Submit the Form
Ask for the RD Account Opening Form. Fill in the details, attach documents, and submit along with your first deposit (e.g., Rs. 900).
Step 4: Start Monthly Deposits
You can deposit manually every month or set up automatic payment via ECS or Post Office Savings Account.
Step 5: Monitor and Withdraw
You will receive a passbook to track deposits and interest. At the end of 5 years, you can withdraw the maturity amount or reinvest.
Tips to Earn in Lakhs with This Scheme
- Invest Higher Amounts: If you invest Rs. 5,000/month instead of Rs. 900, your corpus grows to over Rs. 3.5 lakh in 5 years.
- Start Early: The earlier you start, the longer you benefit from compound interest.
- Use RD for Goal-Based Saving: Save for marriage, education, or emergencies.
- Reinvest Maturity: Use maturity proceeds to start a new RD or invest in other Post Office schemes like NSC or MIS.
Other Post Office Schemes You Should Know
If you like the RD scheme, you might also be interested in:
- Post Office Monthly Income Scheme (POMIS): Invest a lump sum and get fixed monthly interest.
- National Savings Certificate (NSC): Tax-saving, fixed return instrument.
- Public Provident Fund (PPF): Long-term, tax-free wealth creation option.
see also: Want to take a personal loan? these charges can also be heavy on your pocket
Post Office RD Scheme FAQs
Q1. Can I open multiple RD accounts in the Post Office?
Yes, you can open multiple RD accounts, either in your name or jointly.
Q2. Is the interest on Post Office RD taxable?
Yes, the interest earned is taxable as per your income tax slab. However, no TDS is deducted.
Q3. What happens if I miss a monthly payment?
A default fee of Rs. 1 for every Rs. 100 is charged. If 4 consecutive deposits are missed, the account becomes discontinued.
Q4. Can I withdraw before maturity?
Yes, after 3 years you can close the RD early, but you might receive a slightly reduced interest rate.
Q5. Is it better than a bank RD?
In terms of interest rates and safety, Post Office RDs are highly competitive and often preferred for small savings.
