Post Office Time Deposit Scheme: Post Office Time Deposit Scheme is a great scheme for investors looking for fixed returns. By investing Rs 5 lakh in this scheme, you will get only Rs 2.25 lakh as interest in 5 years.
Post Office Time Deposit Scheme: Post Office runs many schemes of small saving schemes. If an investor wants to invest in fixed income schemes then India Post Time Deposit Scheme is a great option. It is just like the fixed deposit of the bank.
However, money can be deposited only for four different tenures. POTD i.e. Post Office Time Deposit can be opened for 1 year, 2 years, 3 years and 5 years. Interest is calculated on quarterly basis, but payment is made on annual basis.
Interest is available up to 7.5 percent
According to the information available on the website of India Post, there has been a change in the interest rate from April 1. Currently, interest is available on time deposit of 1 year at 6.8 percent, on 2 year tenure 6.9 percent, on 3 year tenure 7 percent and on 5 year tenure 7.5 percent. A minimum investment of Rs 1000 can be made. There is no maximum investment limit.
Interest of Rs 2.25 lakh on lakh
Tax deduction is also available under Section 80C of the Income Tax Act on time deposits of 5 years. According to Post Office Calculator, if an investor deposits Rs 5 lakh for 5 years in the Time Deposit Scheme, then he will get a total of Rs 2 lakh 24 thousand 974 as interest. The annual average return called CAGR is 7.71 percent. After completion of five years, you will also get back the principal amount of Rs 5 lakh.
Why invest in Post Office Time Deposit?
1>> Post office time deposit account is similar to bank FD. In this, the interest rate is revised on quarterly basis. It can be opened for 1, 2, 3 and 5 years.
2>> It offers minimum interest of 6.8 percent and maximum interest of 7.5 percent. This is higher than the average returns of banks.
3>> Revision of interest rate is done on quarterly basis. The rate of bank FD depends to a great extent on the repo rate of the Reserve Bank. The Reserve Bank takes a decision on the repo rate every two months.
4>> Post office time deposit account can also be closed pre-maturely.
5>> Post office time deposit account can also be extended within a certain period. Apart from this, emergency fund can also be arranged by pledging it in times of need.
