Post Office Time Deposit Scheme: Post Office runs several 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 in this only for four different tenures. POTD ie Post Office Time Deposit can be opened for 1 year, 2 years, 3 years and 5 years. Interest is calculated on a quarterly basis, but paid annually.
Interest is available up to 7.5 percent
According to the information available on India Post’s website, there has been a change in the interest rate from April 1. At present, 6.8 per cent interest is available on 1-year time deposit, 6.9 per cent on 2-year period, 7 per cent on 3-year period and 7.5 per cent on 5-year period. A minimum investment of Rs 1000 can be made. There is no maximum investment limit.
2.25 lakh interest on 5 lakh
Tax deduction is also available under section 80C of the Income Tax Act on time deposits of 5 years. According to the Post Office Calculator, if an investor deposits Rs 5 lakh in the Time Deposit Scheme for 5 years, 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 revision of the interest rate is done on a quarterly basis. It can be opened for 1, 2, 3 and 5 years.
2>> It offers minimum interest of 6.8 per cent and maximum interest of 7.5 per cent. This is higher than the average returns of banks.
3>> Revision of Interest Paytm is done on quarterly basis. The rate of bank FD depends on the repo rate of the Reserve Bank to a great extent. Every two months, the Reserve Bank takes a decision on the repo rate.
4>> Pre-mature closure of post office time deposit account can also be done.
5>> Post office time deposit account can also be extended within a fixed period. Apart from this, emergency fund can also be arranged by pledging it at the time of need.