The Post Office, a trusted financial institution in India, has recently increased its RD interest rate to 6.7% effective from 1st October 2023. Previously, it was 6.5%. Though this may seem like a minor increment, when compounded over time, this new rate can lead to significant returns.
Consider investing INR 5,000 monthly in a Post Office RD. Over a span of 5 years, this can accumulate to a substantial fund. The Post Office provides an RD term for 5 years, with a minimum monthly deposit of INR 100. There’s no upper limit, so investors can deposit as much as they wish monthly.
If someone starts a monthly RD of INR 5,000 today, after the first 5-year tenure, they’d have a corpus of INR 356,829. Out of this, INR 300,000 is the principal, and the rest, INR 56,829, is interest earned. Renewing this RD for another 5 years can potentially increase the corpus to INR 975,173. Here, the principal invested would be INR 600,000, with an interest accumulation of INR 375,173.
Continuing this strategy and renewing the RD every five years can lead to an exponential growth in investment. After 20 years, you can amass a fund of INR 2,514,486 with a principal investment of INR 1,200,000 and an impressive interest sum of INR 1,314,486.
The real magic happens when this amount is compounded over 30 years. By investing INR 18,00,000 over three decades, you could end up with a massive fund of INR 5,740,000. The interest? A staggering INR 3,940,000.
The Post Office RD, with its revised interest rates, offers a reliable and rewarding investment avenue. It’s an excellent way to ensure long-term savings with the benefit of compound interest. It’s ideal for individuals who want a disciplined savings approach with lucrative returns over time.
