Post Office RD Scheme: Save ₹195 a Day and Build a Fund of Around ₹10 Lakh
Post Office Recurring Deposit Scheme: If you want to build a sizeable corpus through small and regular savings without taking market-linked investment risk, the Post Office Recurring Deposit (RD) scheme can be an option worth considering. The scheme allows investors to deposit a fixed amount every month for five years and earn interest on their savings.
The Post Office RD is backed by the Government of India. According to India Post, the scheme currently carries an interest rate of 6.7% per annum, compounded quarterly.
A popular calculation suggests that saving roughly ₹195 every day, or about ₹5,850 per month, can help you accumulate a substantial amount over time. However, the claim of receiving ₹10 lakh needs an important clarification: a standard five-year RD at this monthly contribution would not itself grow to ₹10 lakh. Reaching that figure requires continuing the investment for a longer period, such as through an extension, and the final amount will depend on the interest rates applicable over time.
How Does the ₹195-a-Day Calculation Work?
You don't actually have to visit a post office and deposit ₹195 every day. The daily figure is simply a way of breaking down the savings target.
If you put aside:
Daily saving: ₹195
Approximate monthly saving: ₹5,850
Annual contribution: ₹70,200
Contribution in 5 years: ₹3,51,000
The deposited amount earns interest under the applicable Post Office RD rate.
India Post's RD has a five-year maturity period, and interest is compounded quarterly. The minimum monthly deposit is ₹100, while higher amounts can be deposited in prescribed multiples.
Can ₹195 a Day Really Become ₹10 Lakh?
This is where investors should pay close attention to the tenure.
Saving ₹195 per day works out to around ₹5,850 per month. Over five years, your own deposits would total approximately ₹3.51 lakh. Interest would increase the maturity value, but it would still remain far below ₹10 lakh.
To target a corpus around ₹10 lakh with a similar monthly contribution, the investment would need to continue for substantially longer than the initial five-year tenure, assuming interest rates remain broadly similar.
Post Office RD accounts can be extended beyond their original five-year maturity period, subject to the applicable rules.
Therefore, headlines suggesting that ₹195 a day directly becomes ₹10 lakh should be read together with the required investment duration and assumed interest rate.
Current Post Office RD Interest Rate
India Post lists the National Savings Recurring Deposit interest rate at:
6.7% per annum, compounded quarterly.
Small-savings interest rates are determined by the government and can be reviewed periodically. Therefore, returns over an extended investment period cannot be assumed to remain exactly the same throughout.
Why Do Investors Choose Post Office RD?
One of the biggest attractions of the scheme is that returns are not directly linked to stock-market movements. This can make an RD useful for conservative investors who want disciplined monthly savings and relatively predictable returns.
Another advantage is the low entry amount. Investors can start a Post Office RD with just ₹100 per month, making it accessible to people who cannot commit a large lump sum.
The account can also be opened for eligible minors, and joint-account facilities are available subject to the scheme's rules.
Loan Facility Is Also Available
Post Office RD isn't necessarily completely inaccessible during its tenure. Under applicable conditions, an account holder may obtain a loan against the accumulated balance after completing the required period.
Available scheme information indicates that after one year, eligible account holders may borrow up to 50% of the balance, subject to applicable rules and repayment conditions.
This feature can provide some liquidity without requiring investors to immediately close their RD.
Should You Invest ₹5,850 Every Month?
If your objective is disciplined saving with limited investment risk, a Post Office RD can be considered. Setting aside around ₹195 a day and depositing approximately ₹5,850 every month can gradually create a meaningful corpus.
However, investors should not assume that ₹195 per day will automatically turn into ₹10 lakh within five years. The ₹10 lakh target requires a longer investment horizon, and actual returns will depend on the interest rates applicable during that period.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Interest rates and Post Office scheme rules may change. Check the latest India Post and government notifications before investing.