If you’re wondering how much money you can accumulate in 5 years by depositing ₹500, ₹1,000, ₹1,500, or ₹2,000 per month in a Post Office Scheme, you’re in the right place! The Post Office Recurring Deposit (RD) scheme is one of the most secure savings options, offering guaranteed returns backed by the Government of India. Let’s break down exactly how much you’ll get after 5 years and why it’s an excellent choice for disciplined savers.
The Post Office RD offers a fixed interest rate, quarterly compounding, and safety – making it a preferred savings tool, especially for risk-averse investors. As of January 2024, the interest rate is 6.7% per annum, which ensures steady growth of your savings over time.
Post Office Scheme Returns on Monthly Deposits
| Monthly Deposit | Total Investment (5 Years) | Interest Earned | Maturity Amount (5 Years) |
|---|---|---|---|
| ₹500 | ₹30,000 | ₹3,416 | ₹33,416 |
| ₹1,000 | ₹60,000 | ₹6,832 | ₹66,832 |
| ₹1,500 | ₹90,000 | ₹10,248 | ₹100,248 |
| ₹2,000 | ₹1,20,000 | ₹13,664 | ₹1,33,664 |
In summary, depositing ₹500, ₹1,000, ₹1,500, or ₹2,000 per month in the Post Office RD scheme can yield up to ₹1,33,664 in 5 years, depending on your contribution. Backed by the Government of India, it’s a secure, reliable, and consistent savings option for individuals of all ages.
Understanding the Post Office Recurring Deposit (RD) Scheme
What is the Post Office RD Scheme?
The Post Office RD Scheme allows individuals to deposit a fixed amount monthly for a tenure of 5 years (60 months). The government fixes the interest rate quarterly, making it a stable and low-risk investment.
Current Interest Rate (2024)
- 6.7% per annum, compounded quarterly.
This makes it slightly more attractive than most bank RDs and savings accounts, especially considering the sovereign guarantee.
see also: Your Wife Can Save Income Tax, Here’s How It Works
How Much Will You Get After 5 Years?
Breakdown for Common Monthly Deposit Amounts:
₹500 Per Month
- Total Deposited: ₹500 × 60 months = ₹30,000
- Interest Earned: ₹3,416
- Maturity Amount: ₹33,416
₹1,000 Per Month
- Total Deposited: ₹1,000 × 60 months = ₹60,000
- Interest Earned: ₹6,832
- Maturity Amount: ₹66,832
₹1,500 Per Month
- Total Deposited: ₹1,500 × 60 months = ₹90,000
- Interest Earned: ₹10,248
- Maturity Amount: ₹100,248
₹2,000 Per Month
- Total Deposited: ₹2,000 × 60 months = ₹1,20,000
- Interest Earned: ₹13,664
- Maturity Amount: ₹1,33,664
These figures are based on a 6.7% p.a. rate, with quarterly compounding.
Why Choose Post Office RD Over Other Schemes?
Government-Backed Security
Your savings are backed by India Post and the Government of India, making it one of the safest investments available.
Flexible Monthly Contributions
Starting as low as ₹100/month, you can increase in multiples of ₹10.
Attractive Interest Rate
At 6.7% p.a., the rate is competitive, especially compared to regular bank RDs.
Loan Facility
After 12 months, you can avail up to 50% of your balance as a loan, making it useful in emergencies.
How is Interest Calculated?
The formula used:
M = R × {[(1 + i)^n – 1] / [1 – (1 + i)^(-1/3)]}
Where:
- M = Maturity amount
- R = Monthly deposit
- i = Quarterly interest rate = Annual rate ÷ 400
- n = Number of quarters
How to Open a Post Office RD Account
Step 1: Visit Your Nearest Post Office
Locate your nearest India Post Office branch.
Step 2: Fill the RD Account Opening Form
Provide personal details like name, address, PAN, Aadhaar, nominee details.
Step 3: Submit KYC Documents
Valid ID proof, address proof, PAN, Aadhaar.
Step 4: Deposit Your First Monthly Installment
Minimum ₹100, multiples of ₹10 accepted.
Step 5: Get Your RD Passbook
You will receive a passbook detailing all transactions and interest accrued.
Alternatively, you can open an RD online if you have an active India Post Internet Banking account.
see also: Better Returns with Less Risk: This Post Office Scheme Offers Secured and Guaranteed Returns
Benefits of Investing ₹500-₹2,000 Monthly in Post Office RD
| Benefit | Explanation |
|---|---|
| Low Minimum Investment | Start with just ₹100 per month. |
| Attractive Returns | Earn 6.7% p.a., better than regular savings accounts. |
| Quarterly Compounding | Your money grows faster due to quarterly compounding effect. |
| Flexible Loan Option | Avail up to 50% of the balance after 1 year without breaking the RD. |
| No Market Risks | Your returns are guaranteed and risk-free. |
| Easy Renewal Option | Extend tenure after 5 years for continued benefits. |
Post Office Scheme FAQs
1. Can I withdraw money before 5 years?
Yes, premature closure is allowed after 3 years but may attract a lower interest rate.
2. What happens if I miss a monthly payment?
A nominal penalty of ₹1 per ₹100 will be charged for each missed month. However, the account won’t be closed immediately.
3. Can NRIs invest in Post Office RD?
No, NRIs are not eligible to open Post Office RD accounts as per current rules.
4. Is the interest taxable?
Yes, the interest earned is taxable as per your income tax slab. However, there’s no TDS deduction; you need to declare the income yourself.
5. Can I open multiple RD accounts?
Yes, you can open multiple RD accounts as per your financial capacity.
