Can post office FD + RD build ₹1 crore? Here’s what ₹10 lakh in FD and ₹10,000 monthly RD can grow into

Post office fixed deposits (FDs) and recurring deposits (RDs) provide guaranteed returns supported by the government. While the post office currently offers 7.5% interest on a 5-year FD and 6.7% on RD accounts, disciplined investing in both schemes over the long term can help build a retirement corpus of close to Rs 1 crore.

In this strategy, an investor puts in Rs 10 lakh in a post office FD and contributes Rs 10,000 every month to a post office RD. Since both schemes have a five-year maturity period, the accounts are extended periodically to continue compounding and long-term wealth accumulation.

After extending both the FD and RD for another five years, the combined maturity value in 10 years can grow to around Rs 38.10 lakh. In this case, the estimated gain works out to approximately Rs 16.10 lakh before tax.

Since post office FD and RD accounts can generally be extended up to 10 years, the maturity proceeds after 10 years can be reinvested into a fresh 5-year post office FD. Meanwhile, the investor can continue depositing Rs 10,000 every month into a new RD account and extend it after maturity to maintain the investment cycle.

At the end of 20 years, the total amount on maturity can reach nearly Rs 97.20 lakh. During this period, the investor’s total contribution would be around Rs 34 lakh.

If the maturity amount of nearly Rs 97 lakh is invested in a mutual fund that delivers 6% annualised returns, it may provide around Rs 68,700 per month for 20 years through a Systematic Withdrawal Plan (SWP).

Experts say taxation can significantly reduce effective returns from FDs and RDs, especially for salaried individuals in higher tax brackets. Interest earned is taxed according to the investor’s slab rate, and TDS may apply if annual interest crosses the prescribed threshold. Financial planners generally recommend using FD and RD products primarily for capital protection and stability rather than long-term inflation-beating wealth creation.