This Post Office scheme will generate Rs 2 lakh from Rs 1 lakh: Know details
The Post Office could be one of the less discussed names among investors in urban India, especially among the youth. But among the elderly and retirees its schemes are hugely popular and it is not difficult to see why if one takes this scheme into consideration.
Kolkata: It won't be an exaggeration to say that the term Post Office is a misnomer since it offers far more than mere postal services. Did you know that the post office began serving the people as a savings bank as far back as 1882 -- only three years after electricity came to India in 1879! The Government Savings Bank Act was passed in 1873 and it actually followed the Post Office Savings Bank of India which was set up in 1882.
The Post Office runs several instruments of deposit for the public. All are fixed-return ones and appeal to those who are risk-averse or seek guaranteed returns on their investments. Of the schemes that the Post Office offers, let's have a look at the Time Deposit scheme. It is a small savings scheme that is similar to the fixed deposits offered by banks.
Interest rate, maturity period
The Post Office Time Deposit Scheme offers discrete maturity periods. These are one year, two years, three years and five years. Note that there is no tenure of four years. The rates of interest are as follows:
One year: 6.9%
Two years: 7.0%
Three years: 7.1%
Five years: 7.5%
One has to invest a minimum amount of Rs 1,000 and in multiples of Rs 100 thereafter. Interest rates are compounded quarterly and payable annually, say Post Office rules. An individual can open a TD account. Joint accounts of up to three adults are permitted. A guardian can also open one on behalf of a minor. Also an individual can open any number of Time Deposit accounts in his/her name or jointly with another person.
How to make money double in Post Office Time Deposit
Let's assume that an individual invests Rs 5 lakh. Calculation shows that if one invests Rs 1 lakh for 5 years, the maturity amount is Rs 1,41,904. Now if this amount is reinvested for another period of five years, the total amount rises to Rs 2,01,363 or more than twice the initial amount. On top of this, the capital in Post Office Time Deposit is completely safe since it comes with a sovereign guarantee. Thus, one can get the amount doubled by investing it twice for a tenure of five years each.
Many retirees and senior citizens opt for this instrument. It comes with guaranteed income, which is so important in advanced years.