Post Office RD: The Post Office has announced an increment in the interest rate for its Recurring Deposit (RD) scheme. Effective from October 1, 2023, the interest rate on RDs has been raised to 6.7%, up from the previous rate of 6.5%. While this seems like a modest hike, it carries the potential for substantial growth over time.
Let’s break down the potential returns:
- Initial Investment: If you commence an RD of ₹5000 monthly at the Post Office today, by the end of 5 years, you will accumulate a fund of ₹356,829. Out of this, ₹300,000 represents your principal investment, and the remaining ₹56,829 is the interest earned.
- Extension for Another 5 Years: If the same RD is extended for another five years (making it 10 years in total), the fund will grow to ₹975,173. This includes a principal of ₹600,000 and an interest of ₹375,173.
- Extension for Yet Another 5 Years: Taking the term to 15 years, the accumulated sum will be ₹1,522,916. This sum comprises a principal of ₹900,000 and an impressive interest of ₹622,916.
- Final Extension to 20 Years: At the end of two decades, your fund stands at ₹2,514,486. Here, ₹1,200,000 is your total investment over the period, and a whopping ₹1,314,486 is the interest you’ve earned on it.
- The 25-Year Picture: Continuing the same trend and extending the RD for 25 years, the fund will amount to ₹4,476,677. This will include your principal investment of ₹1,500,000 and an interest component of ₹2,976,677.
- The 30-Year Grand Total: If you’re thinking long-term and extend the RD for 30 years, you’d be looking at a fund worth ₹5,740,982. With a principal of ₹1,800,000, the interest earned is a staggering ₹3,940,982.
To start an RD at the Post Office, you can begin with a minimum monthly deposit of ₹100. There’s no upper limit, giving investors the flexibility to invest as much as they want.
In summary, the Post Office RD scheme, with its recent interest rate boost, can be a lucrative long-term investment option. The power of compounding, combined with the reliability of a government-backed scheme, makes it a promising choice for those looking to grow their savings over time.
