When it comes to saving and investing, Post Office offers two popular options: Fixed Deposit (FD) and Recurring Deposit (RD). Both offer guaranteed returns, but they differ in how they grow your money. If you’re considering investing Rs 6 lakh for 5 years, it’s important to understand which option will offer you higher returns. FDs provide a lump sum deposit with fixed interest, while RDs allow you to invest in monthly installments. In this comparison, we’ll explore which of these 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)?

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Post Office FD is a small savings scheme offered by India Post where individuals can deposit a lump sum amount for a fixed tenure, and in return, they earn interest on that amount at a predetermined rate. 

Post Office FD

The tenure for Post Office FDs ranges from 1 to 5 years. It is a government-backed investment option, offering attractive interest rates and providing security for your invested amount. 

Tax benefit

The Post Office FD also allows tax-saving benefits under Section 80C of the Income Tax Act for a 5-year term.

What is the minimum amount for opening post office FD account?

The minimum amount for a one-time investment is Rs 1,000, while there is no maximum limit.

Interest Rates on Post Office FDs

  • 1-Year FD: 6.9% interest rate
  • 2-Year FD: 7.0% interest rate
  • 3-Year FD: 7.1% interest rate
  • 5-Year FD: 7.5% interest rate

Extension of post office FD Account

TD (Time deposit) account can be extended from the date of maturity within the following prescribed period. 1 year TD = within 6 months of maturity. 2 year TD = within 12 months of maturity. 3/5 year TD = within 18 months of maturity.

What is Post Office Recurring Deposit (RD)?

Post Office RD is a savings scheme offered by India Post where individuals can make fixed monthly deposits for a specified tenure, ranging from 1 to 5 years. It is a disciplined way of saving, where one can invest a set amount every month, and in return, they earn interest on their total balance. 

Account opening in RD

An RD account can be opened in any post office through a savings account. It can be opened offline and online. 

Maturity period of post office RD

The maturity period of the post office RD is 5 years. The account can be extended for 5 years. 

Who can open a post office RD account?

  • A single adult
  • Joint Account (up to 3 adults) (Joint A or Joint B)
  • A guardian on behalf of a minor
  • A guardian on behalf of a person of unsound mind
  • A minor above 10 years in his name

What is the deposit amount in post office RD account?

The minimum amount for a monthly deposit in post office RD is Rs 100 and above.

Interest Rate of Post Office RD

From 01.01.2024, interest rates are 6.7​ % per annum (quarterly compounded)

Post office FD calculations: Returns on Rs 6 lakh lump sum investment?

  • Time period: 5 years
  • Total Invested Amount: Rs 6,00,000
  • Interest Rate: 7.5 per cent per annum 
  • Estimated Returns: Rs 2,69,969
  • Total value at maturity: Rs 8,69,969

Post office RD calculations: Returns on a Rs 10,000 monthly investment?

  • Time period: 5 years
  • Total Invested Amount: Rs 6,00,000
  • Interest Rate: 6.7% per annum 
  • Estimated Returns: Rs 1,13,659
  • Total value at maturity: Rs 7,13,659

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)