FD: If you are thinking of making a safe and long term investment, then Post Office Fixed Deposit (FD) can be a great option. Let’s know the full news.
FD: If you are thinking of making a safe and long term investment, then Post Office Fixed Deposit (FD) can be a great option. Here you get FDs of different tenures just like banks, but if you look at it from a business point of view, then through Post Office FD you can increase your investment more than three times. Let us know how by investing ₹5,00,000 you can get a return of up to ₹15,24,149.
Interest rates on post office FD
Post office FD schemes are available for different tenures like 1, 2, 3 and 5 years. Currently, the interest rates on these FDs are as follows:
- 6.9% interest on 1 year FD
- 7.0% interest on 2 year FD
- 7.1% interest on 3 year FD
- 7.5% interest on 5 year FD
How to make three times the amount?
If you want to convert your ₹5 lakh into ₹15.24 lakh, then you have to invest this money in FD for 5 years first and then extend it twice for 5 years each. This process will have to be continued for a total of 15 years. Let’s understand this through an example.
Understand with example
Suppose you have invested ₹5,00,000 in FD for 5 years, which is getting an interest rate of 7.5%. After the first 5 years, you will get a return of ₹2,24,974 and your maturity amount will be ₹7,24,974. After this, you have to extend this FD for the next 5 years, which will give you an interest of ₹3,26,201 and your maturity amount will become ₹10,51,175. Then, extending this FD for a second time for 5 years will give you an interest of ₹4,72,974 and your maturity amount will become ₹15,24,149. Thus, in 15 years, your investment will get a total return of ₹10,24,149 in the form of interest only.
Rules for extending FD
It is also important to understand the process of extension in post office FD. FD can be extended on the following conditions:
- 1 year FD can be extended within 6 months of maturity.
- 2 year FD can be extended within 12 months of maturity.
- 3 and 5 year FDs need to be extended within 18 months of maturity.
Also, when you are opening the FD account, you can request for an extension if you wish.
Interest rate on extension
When extending an FD, you will get whatever interest rate is applicable at that time. For example, if you have invested ₹5,00,000 in an FD for 5 years and are getting 7.5% interest on it, then even after the extension you will get a return of 7.5% interest rate. If the interest rate changes at that time, it will not affect your FD, because you will get the same interest which was at the time of maturity.
