SIP (Systematic Investment Plan) is seen as a good way to invest money nowadays. But some people still don’t trust the stock market.
They prefer schemes where they’re sure to get back what they invest and keep their money safe.
If you’re one of those people, you might like Post Office Recurring Deposit, or RD. You don’t need to put a lot of money in all at once.
You can put in a fixed amount every month and still get good returns.
Here’s how it works: Post Office RD lasts for 5 years. It gives you an interest rate of 6.7 percent, calculated every three months.
That adds up nicely. For example, if you put in Rs 7000 every month, you’ll have around Rs 5 lakh after 5 years and about Rs 12 lakh after 10 years.
Let’s break down how you reach 12 lakhs
If you put Rs 7000 each month into this scheme, you’ll invest Rs 4,20,000 in 5 years. At an interest rate of 6.7 percent, you’ll get Rs 79,564 in interest over 5 years.
So, when you add what you invested and the interest, you’ll have around Rs 4,99,564, which is close to Rs 5 lakh.
Now, if you extend this RD for another 5 years, you could reach around Rs 12 lakh. Your total investment would be Rs 8,40,000.
You’d earn Rs 3,55,982 in interest at 6.7 percent. When it matures, you’d have Rs 11,95,982, which is close to Rs 12 lakh.
Here are some benefits of Post Office RD
1) You can start with just Rs 100, an amount almost anyone can save. There’s no maximum limit on how much you can invest.
2) You earn compound interest, meaning you make more money from your interest over 5 years.
3) You can open multiple RD accounts. You can even open a joint account for up to 3 people or an account for a child.
4) The RD matures in 5 years, but you can close it early after 3 years. You can also name someone to get the money if something happens to you.
And after it matures, you can continue it for another 5 years if you want.
