At this time, a very important and useful news is coming out for small and middle class investors from the corridors of personal finance, safe investment and financial planning. If you also want to create a big and secure fund for the future by saving a part of your hard-earned money every month, then this question must be coming in your mind that which institution is best for Recurring Deposit (RD). At present, it is the biggest topic among the common investors of the country that among the government-backed Post Office RD and the country's largest public lender SBI RD, investing Rs 10,000 every month will give more bumper returns in a long period of 10 years. Even a seemingly small difference in interest rates can increase or decrease your total earnings by thousands of rupees in the long run. Let us calculate in detail and understand which of the two investment options will prove to be most beneficial for you. What is Recurring Deposit (RD) and why is it so popular among investors? Recurring Deposit i.e. RD is such a traditional and extremely popular financial option, in which the investor has to deposit a fixed amount every month (on a fixed date) for a fixed period. On completion of maturity, the investor gets the full benefit of the principal amount as well as the fixed compound interest on it. RD is a boon for small and middle class investors who want to create a large corpus by making small savings every month from their salary or income instead of investing a huge amount in lump sum. There is no risk of market fluctuations, due to which investors' money remains completely safe. Post Office RD vs SBI RD: Interest Rates, Security and Features When it comes to both the major options, it is important for investors to understand their features in depth: Post Office RD: The interest rates offered in this post office scheme usually range between 6.9 percent to 7.5 percent. Its biggest feature is that it has 100% Sovereign Guarantee of the Government of India, which makes it the safest medium of investment. It generally has a tenure of 5 years, which can be extended for the next 5 years by giving an application. In this, the interest is calculated on quarterly basis (Quarterly Compounding), which increases the returns a little more. SBI RD: In State Bank of India, the country's largest bank, RD interest rates usually range from 6.5 percent to 7 percent (or slightly higher in special periods). The biggest feature of SBI RD is its flexibility, where investors can choose the tenure from 1 year to 10 years as per their convenience. Apart from this, due to being connected to the banking system, liquidity and facility of withdrawal of money or loan is considered a little easier. Financial calculations on investment of Rs 10,000 every month for 10 years Let us now understand through mathematical figures that if an investor deposits an amount of Rs 10,000 every month in RD for 10 consecutive years, then how much return will he get in the end. 1. Post Office RD Calculation: Monthly Investment: ₹ 10,000 Investment Period: 10 Years (120 Months) Total Deposit Amount: ₹ 12,00,000 (Rs 12 Lakh) Estimated Interest Rate: In the range of approximately 7.1% to 7.5% Maturity Amount: Approximately ₹ 17,85,761 Total Interest Earned: Approximately ₹ 5,85,761 2. SBI RD Calculation: Monthly Investment: ₹ 10,000 Investment Period: 10 Years (120 Months) Total Deposit Amount: ₹ 12,00,000 (Rs 12 Lakh) Estimated Interest Rate: Around 6.8% to 7.0% Maturity Amount: Around ₹ 17,40,945 Total Interest Earned: Around ₹ 5,40,945 Which option will give more benefits to investors? What should one choose? On analyzing both the above calculations and the current interest rates, it becomes clear that due to the slightly higher interest rate in Post Office RD, the maturity amount received on completion of 10 years is higher than that of SBI. Although this difference between the two is not like a huge mountain, yet over a long period of 10 years this small difference can give you an additional profit of Rs 8,000 to Rs 10,000 or even more. If your main objective is to get 100% government protection, guaranteed returns without any risk and slightly better interest, then Post Office RD can prove to be a great advantage for you. On the contrary, if you need other modern features, loan facilities and more flexibility associated with the bank, then SBI RD is also a strong option. Keeping your financial goals and priorities in mind, you can make your future financially strong by choosing any of these plans.
