The Post Office offers a variety of safe investment schemes, one of which is the Post Office Time Deposit (often referred to as Post Office FD).
This scheme provides a secure way to double your money over time. By investing Rs 5 lakh in this scheme, you can grow your investment to more than Rs 10 lakh. Here’s a simple trick to make this happen.
How to Maximize Your Returns
Post Office FDs come with different tenures: 1, 2, 3, and 5 years. The interest rate varies depending on the tenure. To maximize your returns and more than double your money, opt for a 5-year FD.
Currently, this FD offers an interest rate of 7.5%. To achieve the doubling effect, you need to reinvest your money in the same scheme before it matures. Additionally, a 5-year FD offers tax benefits under Section 80C of the Income Tax Act.
Turning 5 Lakh into More Than 10 Lakh
If you invest Rs 5 lakh in a 5-year Post Office FD at a 7.5% interest rate, you will earn Rs 2,24,974 in interest over five years. This brings your total amount to Rs 7,24,974.
If you then extend the FD for another 5 years, you will earn Rs 5,51,175 in interest over the next five years.
After 10 years, your total amount will be Rs 10,51,175. This way, by simply reinvesting, you can turn Rs 5 lakh into more than Rs 10 lakh.
Understanding the Rules of Extension
- 1-Year FD: Extend within 6 months from the date of maturity.
- 2-Year FD: Extend within 12 months from the date of maturity.
- 3 and 5-Year FD: Extend within 18 months from the date of maturity.
You can also request an extension at the time of opening the account. The interest rate applicable at the maturity date will apply for the extended period.
Following these extension rules ensures you get the best return on your investment.
