FD vs RD: Which can offer higher returns on Rs 15,00,000 investment?
Compare Post Office FD and RD to determine which offers better returns on a Rs 15 lakh investment. Understand interest rates, maturity benefits and tax advantages.
Investing Rs 15 lakh in a secure savings scheme? Post Office Recurring Deposit (RD) and Fixed Deposit (FD or Time Deposit) are two popular government-backed options. While both offer safety and steady growth, the return potential and structure differ significantly. This guide compares key features—interest rates, maturity value, deposit flexibility and tax benefits. Read on to discover whether Post Office RD or FD offers the most value for your investment.
Post Office RD vs FD
When investing Rs 15,00,000, choosing between a Post Office Recurring Deposit (RD) and a Post Office Fixed Deposit (FD or TD) depends on your financial goals—regular monthly saving or lump-sum investment. Here’s a detailed comparison to help you decide which offers better returns.
Interest Rates: RD vs FD
- Post Office RD: Offers 6.7% per annum, compounded quarterly.
- Post Office FD (5-Year TD): Offers a higher rate of 7.5% per annum, calculated quarterly but paid annually.
Investment Structure: Monthly vs Lump-Sum
- RD: Requires monthly deposits. For a Rs 15 lakh investment, you'd deposit Rs 25,000 per month over 60 months.
- FD: Requires a one-time lump-sum deposit of Rs 15 lakh for a fixed term of 5 years.
Estimated Returns on Rs15 Lakh
Post Office RD:
- Total Investment: Rs15,00,000
- Returns: Rs 2,84,148
- Maturity Value: Rs 17,84,148
- Post Office FD (5-Year TD):
- Total Investment: Rs 15,00,000
- Returns: Rs 6,74,922
- Maturity Value: Rs 21,74,922
FD clearly offers higher returns for the same investment amount over 5 years.
Account opening & eligibility
Both schemes are open to:
- Single adults
- Joint holders (up to 3 adults)
- Guardians for minors or persons of unsound mind
- Minors aged 10+ (in their own name)
- There’s no limit on the number of accounts you can open under either scheme.
Minimum and maximum deposit limits
- RD: Minimum ₹100/month, in multiples of Rs 10. No upper limit.
- FD: Minimum ₹1,000, in multiples of Rs 100. No maximum limit.
- Both plans offer flexibility for varying investment capacities.
Loan and advance features
RD Account:
- Loan available after 12 installments.
- Loan up to 50% of balance.
- Interest: RD rate + 2%.
- FD Account:
- Can be pledged as collateral.
- Transfer or pledge to government bodies, banks, and financial institutions allowed.
Premature withdrawal rules
RD:
- Allowed after 3 years.
- Interest calculated at PO Savings rate if withdrawn early.
FD:
- Allowed after 6 months.
- If withdrawn before 1 year: PO Savings rate.
- After 1 year: 2% less than applicable TD rate for the period completed.
- FD offers more liquidity, but both penalize early closure.
Tax benefits (Section 80C)
- Only 5-Year FD (TD) qualifies for tax deduction under Section 80C.
- RD does not offer any tax benefits.
- This makes FD a better option for tax-saving investments.
Which is better for Rs 15 lakh investment?
- Return-wise: FD offers nearly 2.4x the interest compared to RD.
- Convenience-wise: FD requires a one-time deposit; RD needs monthly discipline.
- Tax-wise: FD has Section 80C benefits.