How much return will you get in 5 years if you deposit Rs 3,000 every month in Post Office RD? – It is not easy for employed people or people with limited income to deposit a large amount. But under recurring deposit, you can create a large amount by making small savings. Post office is giving interest up to 6.90 percent on RD. Today we are telling you about RD so that you can earn huge amount by investing in it.
How does the Post Office RD work?
The Post Office RD is a fixed deposit scheme where you deposit a fixed amount every month for a predefined tenure, ranging from 5 to 10 years. The interest rates are set by the government and reviewed periodically. Currently, the interest rate is 5.8% compounded quarterly.
Calculating the returns
To calculate the returns on your Post Office RD investment, you need to consider the principal amount, the interest rate, and the tenure. In this case, let’s assume you deposit Rs 3,000 every month for 5 years.
The total investment over 5 years would be Rs 3,000 x 12 months x 5 years = Rs 1,80,000.
The interest earned on this investment will depend on the compounding period (quarterly in this case). To calculate the interest, we will use the formula:
A = P(1 + r/n)^(nt)
Where:
A = Total maturity amount
P = Principal amount (Rs 1,80,000)
r = Annual interest rate (5.8%)
n = Number of times interest is compounded per year (quarterly)
t = Number of years (5)
The power of compounding
One of the key advantages of the Post Office RD is the power of compounding. The interest is compounded quarterly, which means you earn interest on the interest as well. Over the long run, compounding can significantly increase your returns.
In our example, the interest earned on the first quarter will be minimal. However, as the interest is reinvested, the subsequent interest earnings will be higher. This compounding effect allows your investment to grow at an accelerated pace.
How much return will you get in 5 years if you deposit Rs 3,000 every month in Post Office RD?
Post Office Recurring Deposit or RD can help you save big! You can use it like a piggy bank! Meaning, when your salary comes, you keep depositing a certain amount in it every month and after 5 years when this post office RD matures, you will have a huge amount in your hand. You may not get interest by depositing money in the piggy bank at home, but by depositing money here you also get huge interest.
Recurring deposit account can be opened in post office
Recurring deposit is a type of small savings scheme. Any person can open his account not only in post office but also in banks. The tenure of Post Office RD is 5 years. In this post office RD, you can also extend it for next 5 years. However, this period will increase on an annual basis. Meaning you will have to increase it every year after 5 years!
recurring deposit interest rate
| Tenure (in Years) | General Public Interest Rate (%) | Senior Citizen Interest Rate (%) |
| 1 Year | 6.90% | 6.90% |
| 1 to 3 Year | 7.00% | 7.00% |
| 3 to 5 Year | 7.50% | 7.50% |
| 5 to 10 Year | 6.80% | 6.80% |
How much return will you get in 5 years by depositing Rs 3,000 every month in Post Office RD?
Post Office RD Scheme has an interest rate of 5.8% for the general public for a period of 5 years. In such a situation, if you deposit Rs 3,000 every month for 5 years in Post Office Recurring Deposit, then you will have to deposit a total of Rs 1,80,000. On this you will get interest of Rs 34,097 at the interest rate of 5.8 percent. In total you will get Rs 2,14,097 after a period of 5 years.
Here is a calculation:
Investment = Rs. 3,000/month * 12 months/year * 5 years = Rs. 1,80,000
Interest rate = 5.8%
Interest = (Investment * Interest Rate) * Time
= (1,80,000 * 5.8) / 100
Interest = Rs 34,097
Total = Investment + Interest
= 1,80,000 + 34,097
= Rs 2,14,097
In this way, by depositing Rs 3,000 every month in Post Office RD for 5 years, a common citizen will get Rs 2,14,097.
Comparison with other investment options
To understand the potential returns from a Post Office RD better, let’s compare it with some other investment options.
Fixed Deposit (FD): FDs offer higher interest rates than Post Office RDs. However, the interest earned is taxable. If you are in a lower tax bracket, the Post Office RD could offer better post-tax returns.
Mutual Funds: Mutual Funds provide potentially higher returns but are subject to market risks. If you have a low-risk appetite and prefer a fixed return, the Post Office RD is a safer option.
Public Provident Fund (PPF): PPF is a government-backed investment option with a lock-in period of 15 years. It offers an interest rate of 7.1% compounded annually. While PPF offers a higher interest rate, the long lock-in period may not be suitable for everyone.
You can start investing in Post Office RD with Rs 100
You can invest a minimum of Rs 100 every month in this RD scheme of the post office. Above this you can deposit any amount in multiples of 10. There is no limit on the maximum deposit amount in Post Office Recurring Deposit.
Can open more than one account in recurring deposit
Not only this, you can also open one or more accounts in Post Office RD. This account can also be opened in the name of small children. If you are 10 years old or older, you can operate it yourself! 3 people can open joint account in post office recurring deposit.