Post Office Investment Calculator: What Is It And How Does It Work?

Mutual funds

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.

Also Read – https://navi.com/blog/best-mutual-funds/ 

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 – https://navi.com/blog/top-fixed-maturity-plans/ 

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

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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.