Post Office FD vs RD: Which one will give higher returns on Rs 6 lakh investment in 5 Years?
Post Office Fixed Deposit (FD) and Post Office Recurring Deposit (RD) are popular investment options for those who want safe and risk-free returns. These schemes are not linked to the market, so your returns are guaranteed. In FD, one can invest a lump sum amount at once, while in RD, individuals can deposit money every month. Both are great options, but over the long term, Post Office FD tends to give better returns. Let’s understand why FD is a more profitable choice for long-term investments.
When it comes to saving and investing, the Post office offers two popular options: Fixed Deposit (FD) and Recurring Deposit (RD). Both are safe and reliable, 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.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is Post Office Fixed Deposit (FD)?
Post Office FD is a 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 safe and 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 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