Key facts
- Recurring Deposits (RDs) provide a secure way to save with fixed monthly investments.
- India Post offers a 6.7% interest rate on a 5-year RD.
- Banks like SBI, PNB, HDFC, ICICI, and Axis Bank offer 5-year RD interest rates ranging from 6.30% to 6.50%.
- A monthly investment of Rs 25,000 in a 5-year RD at India Post matures to approximately Rs 17,84,148.
- The same investment in SBI matures to approximately Rs 17,65,457.
- RD returns are subject to income tax based on the investor's tax slab.
Recurring Deposits (RDs) are a popular fixed-income investment option for individuals looking to build savings through regular monthly contributions without market risk. Investors can open RD accounts with banks or post offices, each offering different interest rates and tenures. The interest earned on RDs is compounded quarterly.
For a 5-year tenure, India Post offers a competitive interest rate of 6.7%. Banks also provide attractive rates, typically ranging from 6% to 7%. The final maturity amount is determined by the monthly investment, the duration of the deposit, and the applicable interest rate.
Investing Rs 25,000 monthly for five years in an RD account at India Post is projected to yield approximately Rs 17,84,148. State Bank of India (SBI) offers a 6.30% interest rate, resulting in an estimated maturity of Rs 17,65,457. Punjab National Bank (PNB) offers 6.35% with a maturity of Rs 17,67,781. HDFC Bank provides 6.40% interest, leading to a maturity of Rs 17,70,102. ICICI Bank offers 6.50% with a maturity of Rs 17,74,771, and Axis Bank offers 6.45% with a maturity of Rs 17,72,434.
It is important for investors to note that the returns generated from RDs are taxable and will be subject to the individual's income tax slab.