Post Office FD vs RD: Which will generate higher returns on an investment of Rs 6 lakh in 5 years?
When it comes to saving and investing, the Post Office offers two popular options: Fixed Deposit (FD) and Recurring Deposit (RD). Both offer guaranteed returns, but differ in how they grow your money. If you are thinking of investing Rs 6 lakh for 5 years, it is important to understand which option will give you maximum returns. FDs provide a lump sum deposit with fixed interest, while RDs allow you to invest in monthly installments. In this comparison, we will explore which of the two options will give you the best return on your Rs 6 lakh investment over the next five years.
What is Post Office Fixed Deposit (FD)?
Post Office is a small savings scheme offered by India Post where people can deposit a lump sum for a fixed period of time, and in return, they get interest on that amount at a predetermined rate.
Post Office FD
The time to use FDs at Post Office is from 1 to 5 days. It is a government-backed investment option, offering attractive interest rates and providing you with a guarantee of your investment.
Tax benefit
Post Office FD also allows tax saving benefits under Section 80C of the Income Tax Act for a period of 5 years.
What is the minimum deposit for opening a postal FD account?
The minimum one-time investment amount is Rs 1,000, while there is no maximum limit.
Interest rates on Post Office FDs
- 1 Year FD: 6.9% interest rate.
- FD for 2 years: 7.0% interest rate.
- FD for 3 years: 7.1% interest rate.
- FD for 5 years: 7.5% interest rate.
Post Office FD Account Extension
A TD (Time Deposit) account can be extended from the maturity date within the next fixed period. 1 year TD = within 6 months of maturity. 2 years TD = within 12 months of maturity. 3/5 years of TD = within 18 months of maturity.
What is a Post Office Recurring Deposit (RD)?
Post Office is a savings scheme offered by India Post where individuals can make fixed deposits every month for a specified period, ranging from 1 to 5 days. It is a systematic method of saving, where one can invest a fixed amount every month, and in return, earn interest on his entire balance.
Account opening with RD
RD account can be opened at any post through savings account. It can be opened offline and online.
Post maturity is RD
Maturity period of RD post is 5 years. The account can be extended for 5 years.
Who can open an RD postal account?
- A single adult
- Joint Account (up to 3 adults) (Joint A or Joint B)
- The guardian representing the child
- A guardian instead of an insane person
- He is more than 10 years younger to his name
How much is the deposit amount in the RD postal account?
The minimum monthly deposit amount in post RD is Rs 100 and above.
Postal Interest Rate RD
From 01.01.2024, interest rates are 6.7% per annum (compounded quarterly)
Post FD calculations: Returns to Rs 6 lakh lump sum?
- Duration: 5 years
- Total Investment: Rs 6,00,000
- Interest Rate: 7.5 percent per annum
- Estimated returns: Rs 2,69,969
- Total amount at maturity: Rs 8,69,969
Post RD figures: Returns on Rs 10,000 monthly investment?
- Duration: 5 years
- Total Investment: Rs 6,00,000
- Interest Rate: 6.7% per annum
- Estimated returns: Rs 1,13,659
- Total amount at maturity: Rs 7,13,659
(Disclaimer: Our calculations are guesswork and not investment advice. Do your best or consult a professional for financial planning)
