Post office FD vs post office RD: On Rs 5 lakh investment in each, which option can give you Rs 1.30 lakh more in 5 years
Post Office FD vs Post Office RD: While RD has a lock-in period of five years, in post office FD, one can make investments up to five years. The 5-year FD also offers tax benefits on deposits of up to Rs 1.50 lakh in a financial year under Section 80C of the Income Tax Act, 1961.
Post Office FD vs Post Office RD: Post Office Recurring Deposit Account (RD) and Post Office Time Deposit Account (TD) are small savings schemes that offer guaranteed returns to investors. While in RD, one deposits on a monthly basis, in TD, or post office fixed deposit (FD), investments are made one time. While RD has a lock-in period of five years, in post office FD, one can make investments up to five years. The 5-year FD also offers tax benefits on deposits of up to Rs 1.50 lakh in a financial year under Section 80C of the Income Tax Act, 1961. In this write-up, learn more about post office RD and post office FD and which option can give you better returns on a Rs 5 lakh investment.
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Post Office Recurring Deposit Account (RD)
Post office RD offers 6.7 per cent per annum interest compounded quarterly. One can open a single or a joint account with a minimum amount of Rs 100. There is no maximum limit to investment. Deposits are made every month and can also be made in advance up to 5 years.
Post Office Recurring Deposit Account (RD)
If one has made 12 installments in post of RD, they can also take a loan against deposits. One can close the RD account prematurely after 3 years from the account opening or can also extend for further 5 years after completing the lock-in period of 5 years.
Post Office Time Deposit Account (FD)
Post office offers FDs for 1-, 2-, 3-, and 5-year duration. The interest rates for these FDs are 6.9 per cent, 7.0 per cent, 7.1 per cent, and 7.50 per cent, respectively. Not only does a 5-year FD offer the highest interest rate among all post office FDs, it also offers tax benefits under Section 80C.
Post Office Time Deposit Account (FD)
The minimum amount for a one-time investment is Rs 1,000, while there is no maximum limit. The account can be closed prematurely under certain conditions, while it can also be extended. A TD account can also be pledged or transferred as security.
Post office RD vs post office FD: Which will give you higher returns on Rs 5 investment?
Here, we will take the example of a 5-year post office FD where we will invest Rs 5 lakh in it. On the other hand, in RD, we have taken Rs 8,333.33 as the monthly investment, which will amount to Rs 5 lakh in 60 instalments in 5 years.
Post office RD vs post office FD: Which will give you higher returns on Rs 5 investment?
In post office FD, a Rs 5 lakh investment will give you an estimated interest of Rs 2,24,974 and an estimated maturity amount of Rs 7,24,974.
Post office RD vs post office FD: Which will give you higher returns on Rs 5 investment?
In post office RD, a Rs 8,333.33 monthly investment, or a total Rs 5 lakh investment in 5 years, will give you an estimated interest of Rs 94,709 and the estimated maturity amount of Rs 5,94,689.
So, we see that of the two options, the post office FD gives you Rs 1,30,265 more in the five-year period.