For Indian investors seeking safe and assured returns, post office small savings schemes continue to remain a top choice. Backed by the Government of India, these schemes offer guaranteed returns without market risks. Among them, the Post Office Recurring Deposit (RD) Scheme has become a popular option for individuals who wish to deposit a fixed amount every month and earn attractive interest at maturity.
How the Scheme Works
In a Recurring Deposit (RD), investors deposit a fixed sum every month for a predetermined tenure, and the accumulated deposits earn compound interest. This scheme is particularly suited for salaried individuals and small investors who prefer disciplined savings with guaranteed growth.
Example: ₹4000 Monthly Deposit Calculation
Let us consider an example where an investor deposits ₹4000 per month in a Post Office RD for 5 years (60 months). At present, the Post Office RD scheme offers an interest rate of 6.7% per annum (compounded quarterly).
Here is how the returns will look:
| Particulars | Amount (₹) |
|---|---|
| Monthly Deposit | 4,000 |
| Tenure | 5 years (60 months) |
| Total Investment | 2,40,000 |
| Interest Earned (approx.) | 45,459 |
| Maturity Value | 2,85,459 |
(Interest rates are subject to quarterly revision by the government. The above example is based on the current 6.7% annual rate.)
Why This Scheme Is Attractive
The Post Office RD ensures a disciplined savings habit with a guaranteed lump sum at maturity. Unlike market-linked investments, there is no risk of capital erosion. Investors can also take loans against their RD if required, making it a flexible savings option. Senior citizens, small business owners, and young earners often prefer this scheme for its simplicity and safety.
Key Points Investors Should Remember
- The minimum deposit amount is ₹100 per month, and thereafter in multiples of ₹10.
- Premature closure is allowed after 3 years, subject to conditions.
- Interest is taxable as per the individual’s income tax slab, but no TDS is deducted at source.
- The scheme can be extended for another 5 years after maturity.
Final Word
By investing ₹4000 per month, an individual not only builds a disciplined saving habit but also secures a guaranteed return of ₹45,459 over 5 years, making the total maturity value ₹2,85,459. For conservative investors looking for a reliable option with assured returns, the Post Office RD scheme remains one of the best choices in 2025.