Kolkata: The good, old, possibly fuddy duddy post office offers several savings and investment opportunity for disciplined investment, which are mostly patronised by middle-class citizens. The post office has remained at the centre of the investment journey of millions of Indians despite the proliferation of modern market-linked investment instruments that provide superior returns.
One of the popular instruments in a post office is the RD or recurring deposit. The interest rate on Post Office RD account hovers in a range between 5.8% to 6.8 annually. The exact rate depends on the tenure of the deposit. However, the rules of post office investment also state that penalty is charged for late payments of RD. In case a depositor misses a monthly instalment, he/she has to pay it with a penalty of Re 1 for every Rs 100 per month for each such default.
How much interest is on RD in post office
The tenure of a RD is usually 5 years, But a depositor can extend it by another 5 years by submitting an application to the post office. Now let’s use a post office RD calculator to find out the corpus that can accumulate with a monthly amount of Rs 5,000. This amount invested for 5 years will fetch a total value of Rs 3,54,957. Of this amount, the total principal amount is Rs 3 lakh while returns of Rs 54,957 will be generated by the RD account. The interest amount multiplies close to 5 times if the tenure of investment is stretched by another 5 years. In this case, the interest component will become Rs 2,44,940 on a principal of Rs 6 lakh. This will translate into a cumulative return of 8,44,940.
Millionaire dreams through post office RDs
If you want to become a millionaire through post office RDs, it is possible with a modest deposit of Rs 6,000 a month. A rate of 6.7% will propel the investments to accumulate an amount of Rs 10.25 lakh. If you invest Rs 7,000 a month, the total amount over a period of 10 years would become Rs 11.95 lakh, of which principal will be Rs 8.4 lakh and the interest component of Rs 3.55 lakh. if one raises the monthly deposit to Rs 8,000, at the end of 10 years, a total of Rs 13.66 lakh will be generated – interest of Rs 4.06 lakh will be generated by principal sum of Rs 9.6 lakh. Interests are compounded quarterly in these instruments. However, it always desirable that one should consult a qualified personal investment expert before putting one’s money into any instrument.
Every post office offers Recurring Deposit schemes that have been popular for generations since they offer the opportunity of making a cool corpus with the maximum possible security and with moderate amounts that also imparts disciplined savings and investments. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
