Rs 6,000 monthly in Post Office RD could grow to about Rs 4.28 lakh in five years

For those who want to save a little from their salary or earnings every month and put it somewhere safe, the Post Office Recurring Deposit (RD) scheme can be a good option. It does not require a large sum to be invested at once. The depositor keeps paying a fixed monthly instalment and a sizeable fund builds up gradually.

The scheme runs for five years, or 60 months. At an annual interest rate of 6.7%, a person depositing Rs 6,000 every month could receive about Rs 4.28 lakh on maturity.

A key feature of this investment is that there is no worry about stock market ups and downs. Interest on a Post Office RD is paid at the rate fixed by the government. Even so, the current interest rate and the account rules should be checked before starting to invest.

On the numbers: depositing Rs 6,000 a month for five years gives an estimated maturity amount of Rs 4,28,185. The monthly deposit is Rs 6,000 and the investment period is 60 months. The total deposit will be Rs 3,60,000, while the estimated interest comes to Rs 68,185. The calculation is based on a 6.7% annual interest rate and quarterly compounding. The actual maturity amount may change under the rules in force.

In other words, if a person deposits Rs 6,000 every month for five years, their own deposit will total Rs 3.60 lakh. With about Rs 68,185 in interest added, the total will be about Rs 4.28 lakh.

There are also five important points about the Post Office RD. First, one can start with a small amount, as an account can be opened with a minimum of Rs 100 a month. Second, the investment period is generally 60 months. Third, interest is calculated with quarterly compounding.

The fourth point is the loan facility. If the account has been running for at least 12 months and certain conditions are met, a loan of up to 50% of the deposited amount can be available. Fifth is the option of premature closure. The account can generally be closed early after three years, but the interest rate may be reduced under the rules in force.