The Post Office Recurring Deposit scheme is guaranteed by the government and investments can be made in small instalments.
While one can invest in the Post Office Recurring Deposit scheme with an amount as low as Rs 100, there are several other schemes where infusing more money can bring substantial gains. Moreover, the scheme lets investors withdraw up to 50 per cent of their deposit balance from the Post Office Recurring Deposit account, after a year of opening it.
Post Office scheme is a safe and reliable investment, which is an alternative to fixed deposit accounts or savings accounts offered by banks. You can choose either the Post Office Savings scheme or the Post Office Recurring Deposit scheme which gives you safe gains over time with negligible risk.
Post Office Recurring Deposit scheme
The Post Office Recurring Deposit scheme is guaranteed by the government and investments can be made in small instalments. The scheme offers one of the better interest rates with a lower limit of Rs 100 and no cap on investment amount.
In comparison to savings account or a fixed deposit account with a bank where you can select the scheme tenure from a range of options, the Post Office scheme recurring deposit account is for a fixed period of five years.
A favoured investment option, the scheme offers attractive rate of interest at 5.8%, which was made effective by the government from April 1, 2020. The interest rates of small savings accounts are fixed by the centre each quarter. With compound interest calculated per quarter, the Post Office scheme enables regular gains for investors.
How effective is the Recurring Deposit scheme?
Investing Rs 10,000 every month in the Post Office Recurring Deposit scheme can bring about mouth-watering returns of Rs 16 lakh in a term of 10 years, as per the current 5.8% rate of interest.
What investors should keep in mind?
To ensure maximum gains, people applying for the Post Office scheme should not miss the monthly deposit. This is important to reach the financial goal of the scheme.
Skipping monthly instalment of deposit invites a penalty of 1% monthly.
It is important to keep in mind that missing 4 successive instalments will result in automatic closure of the account.
In such a case, it is crucial to revive the account within a 2-month period from the defaulting date. If the account is not retrieved within 2 months, it will suffer permanent closure.
It should be noted that the Post Office recurring deposit scheme allows withdrawal of up to 50% of the balance, a year after opening the account.
Individuals opting for rebate facility on advance deposits is limited to only 6 instalments.
The account holder can, at any time, nominate another person to be beneficiary of the scheme’s returns, in case of their death before the pay-out.
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 "Post Office Scheme: Invest Rs 10,000 and earn up to Rs 16 lakh - Know how")
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