Kolkata: In this era of equity markets and mutual funds, the focus of financial discussion often eludes the good old post office. However, no matter whatever the heady feeing over equity market returns, there is always a need in every portfolio of guaranteed-return instruments. And in this era of fragile sense of security, a safe, steady growth of small amounts is bound to appeal to a lot of people. Here in lies the significance of the post office RD (recurring deposit).
In fact, the most significant aspect of the post office RD is that it is ideal for those who do not have adequate money in the pocket to invest as a lumpsum in any instrument. The RD allows a person to set aside a small amount from his/her salary and invest in a completely safe instrument and earn a significant interest rate. Let’s see its features and how is can earn a decent amount of return on small regular investments.
What is Rs 5,000 RD in post office for 5 years
The lowest amount one can invest in the post office RD every month is Rs 100. The design of the scheme is such that one has to invest continuously for 5 years, at the end of which the scheme matures and one gets back the investment along with the interest. The rate of interest applicable to this scheme is 6.7% right now. Another point to remember is that the compounding done every three months.
Let’s see how much interest one will earn if one invests Rs 5,000 every month in an RD account in a post office. A simple RD calculator will tell you that with that investment and 6.7% rate of interest the total interest that one can earn in five years is 56,830. It means that the total payback at the end of five years is Rs 3,56,830, while the principal (out-of-pocket investment) is Rs 3 lakh.
Who can open a post office RD?
The eligibility criteria for opening a Recurring Deposit account in a post office is simple. The following persons can open a RD account in the post office:
A single adult
Joint account with two or three adults
A parent/guardian on behalf of a minor
A guardian on behalf of a person of mentally unsound person
A minor above 10 years in his/her own name
Another significant point is that a person can open any number of accounts. It is not mandatory that one individual can open only one account. The minimum monthly deposit is Rs 100. An account is considered discontinued if there are four defaults in monthly deposits.
If one does not have a lumpsum to invest in a fixed deposit, one can easily go for a recurring deposit in a post office which offers significant benefits and complete safety of capital. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
