Post Office Fixed Deposit (FD), also known as Post Office Time Deposit Account, and Post Office Recurring Deposit (RD) are two popular schemes for people seeking risk-free investment options. These two Post Office schemes are not market-linked and provide guaranteed returns to investors. While one can invest a lump sum amount in an FD, they can invest monthly amount in an RD. However, in the long term, Post Office FD will be a profitable option. Know how.
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Post Office FD Vs RD: Post Office offers a lot of investment options. All of these options are risk-free and offer guaranteed returns at different interest rates. Post Office Fixed Deposit (FD), also known as Post Office Time Deposit Account, and Post Office Recurring Deposit (RD) are two popular schemes from them.
Post Office FD vs RD: Salient features
While FD interest rates are from 6.7 per cent to 7.1 per cent for different durations. For the Post Office RD, the interest rate is 6.7 per cent compounded quarterly.
The advantage of RD is that even if you cannot invest a large amount in lump sum, you can invest a fixed amount every month.
The minimum amount for monthly deposits in the Post Office RD scheme is Rs 100.
The maturity of Post Office RD is 5 years from the date of opening the account. It can be extended for five years more.
Post Office FD, on the other hand, can be opened for 1, 2, 3 and 5 years.
However, when it comes to investment, the FD can give much more interest. In the FD, you can get much more interest than the RD if you invest equal amount of money in both of them.
Know here how much an investment of Rs 1 lakh in Post Office FD will amount to in 1, 2, 3 and 5 years, and how much will you get if you invest Rs 1 lakh in the RD in five years.
1-year post office FD
If you invest Rs 1 lakh in Post Office FD for a year, then you will be given interest at the rate of 6.9 per cent.
In such a situation, after one year, you will get an interest of Rs 7,081, and your total return will be Rs 1,07,081 will be returned after one year.
2-year FD
If you make an FD of Rs 1 lakh in the Post Office for 2 years, then you will be given interest at the rate of 7 per cent.
In such a situation, after two years, you will get Rs 14,888 as interest and a total return of Rs 1,14,888.
3-year FD
If you make an FD for 3 years in the post office, you will get interest at the rate of 7.1 per cent.
In such a situation, you will get an interest of Rs 23,508. After three years, you will get a total of Rs 1,23,508 back.
5-year FD
If you get Post Office FD for 5 years, you will get interest at the rate of 7.5 per cent.
In such a situation, you will get Rs 44,995 as interest in 5 years, and your total return in that duration will be Rs 1,44,995.
5-year RD
Now if we invest Rs 1 lakh in RD in five years, then every month, we have to invest Rs 1666.66 for 60 months.
In 60 months, the total interest you will earn will be Rs 18,943 at the rate of 6.7 per cent, and your total return will be Rs 1.19 lakh.
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In nutshell, Post Office FD is a better option when it comes to earn better returns, but the difference is while one need to make a lump sum investment in FD, an RD allows them to invest little amount monthly.
