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Post Office Time Deposit

In today's fast-paced life, it is important to invest your hard-earned money into a safe and secure investment option and earn good returns on it. There are many investment options available.  Some of us might be invested directly in the stock market, mutual fund and gold, or some of us might be invested in traditional investment options like fixed deposits,  post office deposits. But this instrument is often called a high-risk risk high-reward instrument. Due to this fear, some people invest in traditional methods, like fixed deposits,  post office deposits, etc. In today's blog, I  have given information on what are post office time deposit. How does it work?   Features of the post office time deposit and how to invest in the post office time deposit? 

​What is are post office time deposit? 

Post Office Time Deposit (POTD) is a savings scheme run by the post office. In this, you deposit a lump sum of money for a fixed period (1 to 5 years) and you get a fixed interest on it. This scheme is similar to a fixed deposit in a bank, but it is insured by the Government of India.

The interest rate on your account varies with your POTD account type. 

Post Office Time Deposit: How does it work?

In Post Office Time Deposit (POTD), you deposit a lump sum of money for a fixed period. You can choose this period yourself. In this, you can invest from a minimum of Rs. 1000, and after that, you can invest any amount in multiples of Rs. 100.

How you get interested in this scheme is important. The Post Office calculates interest on your deposited amount quarterly (every three months). But this interest is credited to your account once a year. Therefore, your money remains safe and you continue to get a fixed interest on it.

After the completion of the term, that is, after the end of the period you have chosen, you can withdraw your invested money and the interest earned on it. If necessary, according to some rules, you can withdraw money even before the completion of the term, but some charges may apply for this.

Types of Post Office Time Deposit according to Tenure:

In Post Office Time Deposit, you get the option to choose the term as per your needs and convenience. Mainly, the following four types of options are available:

1-year fixed deposit: If you want to invest for a short period, then this option is good. It is currently getting an interest rate of 6.9%.

2-year fixed deposit: If you are thinking of investing for a medium term, then you can choose this option. It is currently getting an interest rate of 7.0%.

3-year fixed deposit: This option is useful for a slightly longer period and offers good interest. It is currently getting an interest rate of 7.1%.

5-year fixed deposit: If you are thinking of investing for a long time and you want to take advantage of tax benefits, then this option is good. The interest rate of 7.5% is currently getting on a 5-year fixed deposit, and you can also get tax benefits under Section 80C of the Income Tax Act on this investment.

With these different tenor options, you can choose the right option according to your financial goals and time frame.

How to invest in POTD?

Opening a Post Office Time Deposit account is very easy. Follow the following steps. 

• Go to any post office near you.

• Carry the following documents.

Identity proof (Aadhaar card, PAN card, voter ID, driving license).

Address proof (Aadhaar card, electricity bill, telephone bill, passport)

Two passport-size photographs.

• Fill out the application form at the post office.

• Deposit a minimum of Rs. 1000 (by cash or cheque).

Who should invest?

Post Office Time Deposit is a good option for people who:

• Those who want safe and assured returns.

• Those who are willing to take the low risk. 

• Those who want to invest for the medium or long term.

• Those who want to avail of the income tax exemption (only for 5 years of deposit).

• It is a good option for both senior citizens and the general public.

​

 Conclusion:

Before making any investment decision, it is important to decide your financial goals and capacity. If you want more returns and you have a risk-taking capacity, then you can go for stock market or mutual fund investment. And opposite too this, if you are a conservative type of person, you don’t want to take risks, then you can go for traditional investment options like FD or Post Office Time Deposit. 

FAQ: 

1. What is a Post Office Time Deposit? 

Ans: Post Office Time Deposit is a savings scheme in the post office, where you can deposit money for a fixed period and earn a fixed interest on it.

2. How much interest is available in the Post Office Time Deposit?

Ans: Post Office Time Deposit offers an interest rate of 6.9% for 1 year, 7.0% for 2 years, 7.1% for 3 years and 7.5% for 5 years.5 These rates may vary.

3. What is the minimum amount to invest in a Post Office Time Deposit? 

Ans: You can start investing in a Post Office Time Deposit from a minimum of Rs. 1000.

4. Can money be withdrawn prematurely in a Post Office Time Deposit? 

Ans: Yes, but according to some rules. Money cannot be withdrawn for 6 months. If withdrawn after that, the interest rate is reduced.

5. Is there any tax benefit on a Post Office Time Deposit?

Ans: Yes, investing in a 5-year Post Office Time Deposit gives tax benefit up to Rs. 1.5 lakh under Section 80c of the Income Tax Act.

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