Post Office Investment Calculator: What is it And How Does it Work?
Post Office Fixed Deposits (POFD) offered by the Indian Postal Service is one of India’s oldest and popular investment options. If you are looking to open a POFD, you might want to use the Post Office investment calculator to compute expected returns. This tool will let you calculate the exact amount of interest you will earn.
Read along to know more about this calculator.
How to Use the Post Office Investment Calculator?
Follow the given steps to calculate the fixed deposit maturity amount.
Step 1
Select the type of Post Office FD you want to invest in (monthly payout, quarterly payout, half-yearly payout or reinvestment/cumulative)
Step 2
Enter the sum of money you want to invest.
Step 3
Fill in the number of months you wish to continue the investment.
Step 4
Enter the rate of interest.
Step 5
Click on the Calculate button to know the total interest you have earned and the maturity amount.
Benefits of Using Post Office Investment Calculator
- Since postal savings have fixed interest rates, you will get a precise estimate of the amount after maturity.
- You can use it to compare its returns with other fixed-interest investment options. This will let you make an informed decision on your future investment.
- You can adjust the tenure and initial investment amount to find out how to reach your investment goal.
- Calculating the maturity amount of fixed deposits can be tedious. A Post Office investment calculator gives you the result instantly after you enter the required details. Thus, this tool saves you a lot of time.
- You can know the total returns and interest payout of each type of Post Office FDs.
- It is a completely free to use tool which you can access online to calculate returns.
How Does the Post Office Investment Calculator Work?
The Post Office’s interest rate remains constant for the duration of the deposit. It is compounded quarterly but payable annually. The online Post Office investment calculator uses the compound interest formula to calculate the amount received on maturity. This is given as follows:
A = P x (1 + r/4)^(n x 4)
Here A refers to the maturity value of this FD
n is the number of years of investment
r is the interest rate per annum
Let us say that Mr Singh has deposited Rs. 500,000 at a 7% interest rate for a maturity period of 5 years. The amount he will receive upon maturity will be:
A = 500,000 (1 + 0.07/4)^(5×4) = Rs. 500,000 + Rs. 207,389 = Rs. 707,389
What You Should Know about Post Office Fixed Deposits
A Post Office Time Deposit, otherwise called Post Office FDs, is a fixed deposit scheme by the Indian Postal Service. It offers guaranteed returns on money deposited for a fixed tenure.
POFD is considered one of the safest investment options as it is backed by the Government of India (GOI). It offers a choice of four investment periods- one, two, three and five years. Similar to bank fixed deposits, the Post Office offers a higher interest rate when you choose a longer tenure.
You can make a minimum investment of Rs. 1000 and in multiples of 100 thereafter. There is no maximum limit to the balance allowed in this investment scheme. You cannot make a withdrawal of your Post Office FD in the first six months. After that, certain penalties are applicable on premature withdrawal.
TDS is payable on the interest income, though you can get tax deductions under Section 80C of the Income Tax Act for 5-year investment options.
Also Read
What Are the Benefits of Investing in Post Office Fixed Deposits?
The following are some of the great benefits of investing in these FDs:
- Post Office FDs have the backing of the GOI and are, therefore, one of the safest investments.
- They generally carry higher interest rates than those of commercial banks. Moreover, they carry fixed rates allowing you to get predictable returns.
- Post Offices are found in almost every city and town of India, making it easy to get assistance.
- You can start an investment with as little as Rs. 1000. You can pay this amount via cash or cheque to the Post Office.
- The annual interest is credited to your Post Office Savings Account. After maturity, the amount will gain interest applicable to the savings account till you withdraw it.
- You can easily port your POFD account to another branch of your choice.
Final Word
Post Office Fixed Deposits are suitable for investors who want to earn higher returns compared to bank FDs with the same security offered by GOI. However, before investing, you may want to calculate returns using the aforementioned Post Office investment calculator. With this tool, you can do the required financial planning before committing to the long-term investment.
Frequently Asked Questions
Ans: You can invest in the Post Office FD online using the India Post Mobile Banking Application. Sign up using your credentials and click on the ‘Requests’ tab to open a POFD account. You can also directly go to a Post Office branch near you to invest.
Ans: Post Office TDs are ideal for investors who are highly conservative, i.e. those who do not want to take any risks. It suits retirees or those approaching retirement as it provides steady interest income as well as capital protection.
Ans: Any resident Indian can open as many POFD accounts as they want. Eligible account holders of Post Office FDs include single adults, joint accounts of up to three adults, guardians on behalf of minors or persons of unsound mind.
Ans: Yes, investors can apply to have their Time Deposit account extended after maturity. Its tenure will be exactly the same as that of the previous one. Its interest rate will be the same as on the day of maturity.
Ans: Yes, if you choose to close your TD account in less than a year, you will get the same interest as a Post Office Savings Account. After that, you will receive an interest income of less than 2% of the TD interest rate.
Want to put your savings into action and kick-start your investment journey 💸 But don’t have time to do research? Invest now with Navi Nifty 50 Index Fund, sit back, and earn from the top 50 companies.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
