Invest Rs 95 in this Post Office Scheme and Earn Lakhs of Rupees in Income

Introduction

In India, saving schemes offered by the government are one of the safest and most reliable ways to invest your hard-earned money. Among these, the Post Office Savings Schemes stand out due to their credibility, simplicity, and assured returns. One of the most talked-about schemes is the Recurring Deposit (RD) scheme, which allows investors to start with small amounts — as low as ₹95 per month — and over time, accumulate significant wealth, potentially reaching lakhs of rupees depending on the tenure and compounding interest.

This article aims to explain the Post Office Recurring Deposit scheme in detail, with step-by-step information on how investing as little as ₹95 per month can help you build a corpus worth lakhs of rupees. We will also explore other Post Office schemes, their benefits, interest rates, taxation aspects, eligibility, documents required, and how these investments can secure your future.

WhatsApp Group Join Now

Telegram Group Join Now

What is the Post Office Recurring Deposit Scheme?

The Post Office Recurring Deposit (RD) is a savings scheme where you deposit a fixed amount every month for a specified tenure. The deposited money earns compound interest quarterly and is paid along with the principal at the time of maturity.

Key Features of Post Office RD:

Minimum investment: ₹100 (though some regions may allow smaller amounts like ₹95 as part of rounding or special provisions, the official minimum is ₹100).
Maximum investment: No upper limit.
Tenure: 5 years (extendable in blocks of 1 year up to 5 years after maturity).
Interest: Compounded quarterly, declared by the government from time to time.
Loan facility: Available against the RD account after making a few deposits.
Premature closure: Permitted after 3 years under specific conditions.

How Small Investments Grow Over Time

One of the most remarkable aspects of recurring deposits is how small monthly contributions can grow exponentially through the power of compound interest.

Example Calculation – Invest ₹95 Monthly

Even if you start with ₹95 per month for 5 years, the accumulated amount can provide a substantial return when extended over multiple cycles or combined with other savings instruments.

Let’s assume:

Monthly deposit: ₹95
Tenure: 5 years
Interest rate: 6.5% annually (compounded quarterly)

Using the formula for RD maturity amount:

$M=P×(1+r/n)nt−11−(1+r/n)−1/nM = P \times \frac{(1 + r/n)^{nt} – 1}{1 – (1 + r/n)^{-1/n}}$

Where:

$PP$ = Monthly installment
$rr$ = Annual interest rate
$nn$ = Compounding periods per year (4 for quarterly)
$tt$ = Tenure in years

Plugging values:

$M=95×(1+0.065/4)4×5−11−(1+0.065/4)−1/4M = 95 \times \frac{(1 + 0.065/4)^{4\times 5} – 1}{1 – (1 + 0.065/4)^{-1/4}}$

After solving, you would get an approximate maturity amount of ₹6,500 – ₹7,000.

While this may not be lakhs immediately, the real power comes from extending this over time, reinvesting, and combining with other schemes such as the Public Provident Fund (PPF) or Senior Citizen Savings Scheme (SCSS) once you qualify. Compounded over years, this small investment can transform into lakhs of rupees.

Compounding: The Secret Weapon

Compounding refers to earning interest on the principal amount as well as the accumulated interest over previous periods.

Why compounding matters:

The earlier you invest, the more time your money has to grow.
Even small amounts multiply significantly with time.
Quarterly compounding accelerates growth compared to annual compounding.

For example, if you invest ₹95 per month for 5 years and then reinvest the maturity amount annually at the same interest rate for the next 20 years, you could easily cross the lakhs mark.

Extended Example – Long-Term Wealth Creation

Let’s explore how ₹95 per month can realistically become lakhs over a longer period.

Scenario:

Monthly deposit: ₹95
Duration: 5 years + reinvestment for 20 years
Interest rate: 6.5% annually (compounded quarterly)

Phase 1 – First 5 years RD:

₹95/month → maturity ≈ ₹6,700

Phase 2 – Reinvesting ₹6,700 annually for 20 years:

Using compound interest formula: $A=P(1+r/n)ntA = P(1 + r/n)^{nt}$

$A=6700×(1+0.065/4)4×20A = 6700 \times (1 + 0.065/4)^{4 \times 20}$

Solving gives a maturity value around ₹23,000 to ₹25,000.

Now, imagine doing this every 5 years, reinvesting each maturity, or increasing monthly deposits gradually. If you increase your monthly deposit to ₹1,000 or ₹2,000 as your income grows, you can easily build a portfolio worth several lakhs in 20–25 years.

Scheme	Initial Investment	Tenure	Approximate Interest	Tax Benefits
Recurring Deposit (RD)	₹95–₹1,000/month	5 yrs	6.5%	No
PPF	₹500–₹1.5L/year	15 yrs	7%	Yes
SCSS	₹1,000–₹30L	5 yrs	8%	Yes
NSC	₹1,000+	5 yrs	7%	Yes
MIS	₹1,000+	5 yrs	7.5%	No

Who Can Invest?

Eligibility Criteria

Indian residents
Non-resident Indians (NRIs) generally not eligible for some schemes like PPF
Joint accounts allowed in specific schemes
Senior citizens eligible for SCSS
Students and salaried individuals eligible for RD and PPF

Documents Required

Identity proof (Aadhaar card, PAN card, voter ID)
Address proof
Passport-sized photographs
Income proof (if applicable)
Nominee details

Opening an account at the local post office is straightforward and requires filling out a simple form along with document submission.

How to Open an Account

Visit the nearest post office.
Ask for the RD account opening form.
Fill in personal details, nominee details, and deposit amount.
Submit required documents.
Make the first deposit (₹95 or ₹100).
Receive passbook and account number.

Some post offices may allow online payments, auto-debit, or recurring instructions depending on facilities available.

Taxation Aspects

Interest earned on RD is taxable as per slab rates.
PPF interest is exempt from tax.
SCSS and NSC offer tax-saving benefits under section 80C.
TDS applicable if interest exceeds threshold limits.

Tax planning alongside these schemes enhances the net benefit of long-term investments.

Why Post Office Schemes Are Safe

Backed by the Government of India.
Minimal default risk.
Simple rules and transparency.
Accessible even to rural populations.
Helps inculcate a saving habit.

Compared to mutual funds or stocks, these schemes provide steady, predictable returns with no market risks.

Common Questions

Q1: Can I invest in RD with just ₹95?
Some post offices may allow smaller deposits for minor accounts or specific schemes, but officially the RD starts from ₹100 per month. However, starting with ₹100 is still highly feasible for anyone.

Q2: Can I close the account before maturity?
Premature closure is allowed after 3 years with penalty interest.

Q3: Is the investment taxable?
Interest earned on RD is fully taxable.

Q4: Can I reinvest the maturity amount?
Yes, you can either renew the RD or invest in other schemes like PPF or MIS for higher returns.

Investment Strategy for Lakhs of Rupees

Phase 1 – Start Early

Start with whatever you can – ₹100 or ₹200 per month.

Phase 2 – Increase Contributions

As your income grows, increase monthly deposits.

Phase 3 – Diversify

Combine RD with PPF and other schemes.

Phase 4 – Reinvest Maturity Amounts

Use lump sums to open new accounts.

Phase 5 – Tax Optimization

Invest strategically to utilize exemptions under sections 80C and others.

Case Study – Realistic Wealth Creation

Ravi’s Story
Ravi, a school teacher, started investing ₹500 every month in the RD scheme at the age of 25. After 5 years, he reinvested the maturity amount in a PPF account, contributing ₹1,500 monthly. By the age of 45, through disciplined investing and compounding, his total corpus crossed ₹7 lakhs.

This demonstrates that small but consistent investments, disciplined planning, and reinvestment strategies can create wealth.

Important Considerations

Review interest rates periodically as they change with government announcements.
Understand tax implications before investing.
Nomination details are crucial for smooth account transfers.
Keep documents updated.
Plan for emergencies but avoid withdrawing prematurely.

Apply Scheme: Click Here

Conclusion

Investing in Post Office schemes like the Recurring Deposit is an excellent way to build wealth steadily, even if you start with as little as ₹95 or ₹100 per month. The combination of disciplined saving, compounding interest, and reinvestment can help you accumulate lakhs of rupees over time. These schemes offer safety, reliability, and tax benefits, making them ideal for individuals from all walks of life.

Start small, remain consistent, diversify across schemes, and plan for the long term — this is the key to turning modest savings into significant financial security.