Overview
Many people believe that building a Rs 1 crore retirement fund is very difficult but if you invest in safe government-backed schemes like Post Office FD and RD regularly for 20 years with patience and discipline, you may create a large corpus.
Currently,
- Post Office Fixed Deposit Scheme offers up to 7.5% interest on tenure of 5-year FD.
- Recurring Deposit in Post Office is 6.7% per annum.
These schemes are backed by the Government of India and are considered low-risk investment options. By combining these two schemes you can grow nearly up to Rs 1 crore in 20 years, if interest rates remain stable and investments are renewed on time.
Also Read - Post Office Monthly Income Scheme 2026: Know How To Earn Rs 16,650 per Month?
Investment Strategy
Invest in Post Office FD for 10 year = Rs 10 lakh
Post Office FDs come in tenures of 1 to 5 years but you may extent within 18 months before maturity. Interest calculated on a quarterly basis. The 5-year FD at 7.50% is the highest-paying option.
| Years | Interest in (Rs ) |
| 1st | 77135.87 |
| 2nd | 83085.81 |
| 3rd | 89494.70 |
| 4th | 96397.95 |
| 5th | 103833.69 |
| 6th | 111843.00 |
| 7th | 120470.10 |
| 8th | 129762.67 |
| 9th | 139772.02 |
| 10th | 150553.46 |
Total Maturity Amount = 10,00,000 + 1102349 = 21,02,349
Invest Rs 10,000 monthly in RD For 10 years
The Post Office RD currently offers 6.7% per annum with quarterly compounding.
Total Interest = Rs.5,08,546
Total Value = Rs.17,08,546
Total Maturity Amount FD + RD = 38,10,895
Note : The post office Recurring Deposit account matures in 5 years, but can be extended for another five years with or without additional deposits.
After 10 Years:
Reinvested the maturity amount into a fresh FD and continue RD contributions for another 10 years.
| Maturity Amount Re-invest in FD | Rs 38,10,895 |
| RD investment | Rs 10,000 per month same as before |
After 20 Years:
| Investment | Estimated Value After 20 Years |
| FD Corpus | Rs 80.11 lakh |
| RD Corpus | Rs 17.08 lakh |
| Total Corpus | Rs 97.20 lakh |
Here,
Total personal investment over 20 years for you will be
- Rs 10 lakh for Fixed Deposit
- Rs 24 lakh through Recurring Deposit contributions
Total investment will be = Rs 34 lakh
The final estimated maturity value is approximately Rs 97 lakh i.e., nearly Rs 1 crore.
Important Tax Rules
- The interest earned from Post Office FD and RD is treated as “Income from Other Sources” and is fully taxable according to your income tax slab.
- Interest earned on Fixed Deposits and Recurring Deposit must be added to your total annual income.
You need to declare this interest while filing your IT Return. - The 5-year Post Office FD and RD qualifies for tax deduction under Section 80C in the old tax regime. The deduction is available on the investment amount up to Rs 1.5 lakh.
- Unlike banks, the Post Office does not deduct TDS on FD or RD interest.
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