Invest ₹7000 per month and get 12 lakh rupees in 10 years! Know how Post Office RD can make you a millionaire
There are many savings schemes in the post office, which give benefits to investors just like banking services. One such scheme is Post Office RD. This scheme works like a piggy bank, in which you deposit a fixed amount every month and get it with interest after maturity.
What is Post Office RD?
Post Office Recurring Deposit (RD) scheme is a safe investment option, which is for a period of five years. In this, investors deposit a fixed amount every month. Currently, interest is being given on Post Office RD at the rate of 6.7 percent. This interest is calculated on a quarterly basis. You can extend this scheme for ten years and get better returns.
How to get Rs 12 lakh?
If you invest ₹7000 every month in Post Office RD, then your total investment in five years will be ₹4,20,000. At the rate of 6.7 percent interest on this, you will get an interest of ₹79,564. Thus, your total maturity amount in a period of five years will be ₹4,99,564.
However, if you renew it for a further 5 years and deposit ₹7000 per month continuously for 10 years, then your total investment will become ₹8,40,000. On this, you will get a total interest of ₹3,55,982, which will make your total maturity amount ₹11,95,982 or about Rs 12 lakh.
How to get an extension of RD?
To extend the Post Office RD beyond 5 years, one has to apply in the concerned post office. During this period, the same interest rate will be applicable, which was fixed at the time of opening the account. The extended account can be closed at any time.
However, if you continue investing for the entire period, you will get full benefit. If you withdraw money from the extended account for three years, you will get an interest rate of 6.7 percent for three years. For the period after this, the rate of Post Office Savings Account (currently 4 percent) will be applicable.
Benefits of Post Office RD
The post office scheme is backed by the government, which keeps the risk to a minimum. Investors get assured returns. You can start with a small investment like ₹ 10. The RD account can be extended after 5 years.
1. What is the interest rate on Post Office RD?
Currently, 6.7 percent annual interest is being paid on Post Office RD, which is calculated on a quarterly basis.
2. Can money be withdrawn prematurely in Post Office RD?
Yes, but conditions apply on premature withdrawal and the interest rate may be reduced.
3. How many times can Post Office RD be renewed?
The RD account can be renewed once for the next 5 years after a period of 5 years.
4. Is there a tax exemption on Post Office RD?
The interest earned on RD is taxable, but it will be added to your total income and will depend on your taxable income.
5. Can a nominee be added to a Post Office RD account?
Yes, you can add a nominee to your RD account. This can be applied for at the time of opening the account or later.
Thus, Post Office RD is an excellent savings scheme in which you can create a fund of up to Rs 12 lakh through discipline and regular investment.