With the Post Office scheme, you can become a millionaire by saving just ₹416 per day and also benefit from a pension of ₹61,500. However, you will need to plan your investments differently.
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Post Office Scheme: In addition to bank fixed deposits, a large section of the public invests in Post Office small savings schemes. The government operates various schemes through the Post Office, such as PPF, Sukanya Samriddhi, and the Senior Citizen Savings Scheme, with interest rates determined quarterly.
These are risk-free schemes that offer guaranteed income. With patience and proper planning, you can not only receive a substantial sum upon retirement, but also secure a regular income.
Today, we’ll discuss a unique investment option in Post Office schemes, where you can accumulate millions of rupees by retirement by saving a small amount and also receive a quarterly pension. However, this requires you to invest in two small savings schemes alternately: the Public Provident Fund (PPF) and the Senior Citizen Savings Scheme (SCSS).
First, invest in the Public Provident Fund (PPF).
PPF is a scheme that allows you to accumulate a substantial amount if you invest long-term. The government offers an annual interest rate of 7.1%. Anyone can start investing in it. Its maturity period is 15 years, but you can extend it twice by 5 years each. It is a tax-free scheme, as the maximum investment limit is ₹1.5 lakh per year, and up to ₹1.5 lakh is eligible for deduction under Section 80C of the Income Tax Act.
Saving ₹416 per day
Now the question arises: how much should you invest? If you can’t afford to invest ₹1.5 lakh annually in PPF, you should invest ₹12,500 monthly. If you can’t even manage this amount monthly, saving ₹416 per day can deposit ₹1.5 lakh annually in PPF. This will be completely tax-free.
- If you do this for 15 years, you’ll have a deposit of approximately ₹41.35 lakh at maturity, based on a 7.1% interest rate. The total investment will be ₹22.50 lakh and the interest will be ₹18.85 lakh.
- After 20 years, this amount will be approximately ₹67.69 lakh, with a total investment of ₹30 lakh and interest income of approximately ₹37.69 lakh.
- After 25 years, this total amount will be ₹1.03 crore, with a total investment of ₹37.50 lakh and interest income of ₹65.50 lakh.
Start investing in SCSS now
The Senior Citizen Savings Scheme is a scheme that is open to individuals aged 60 and above. However, if an employee has voluntarily retired at age 55, they can invest even at age 55. The maximum investment allowed is ₹15 lakh (1.5 million) from a single account and ₹30 lakh (3 million) from a joint account. This scheme offers an interest rate of 8.2%.
- Suppose you invested in PPF at the age of 35. After 25 years, when you are 60, you will receive ₹1.03 crore (10.3 million). You can now invest only ₹30 lakh (3 million) in SCSS under a joint account, leaving you with ₹73 lakh (7.3 million) remaining.
- Investing ₹30 lakh in SCSS will earn you ₹61,500 in interest-only payments on a quarterly basis for five years. After five years, you can withdraw your principal of ₹30 lakh or extend it for another three years.
Annual interest: 8.2% of ₹30,00,000 = ₹2,46,000
Quarterly interest: ₹2,46,000 / 4 = ₹61,500
It’s worth noting that once you invest, the same interest rate remains applicable for the entire maturity period, even if the government changes the rates later.
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