Unlock Enhanced Returns: The Post Office MIS + RD Strategy
The Post Office Monthly Income Scheme (MIS) is a trusted savings avenue that provides investors with a fixed monthly interest payout. While this offers a regular income stream, savvy investors can further optimize these returns by channeling the monthly MIS interest into a Post Office Recurring Deposit (RD) account. This "MIS plus RD" strategy allows the interest earned to generate further interest, effectively leveraging the power of compounding for enhanced overall gains.
Understanding Post Office MIS:
The MIS account is designed for those seeking a steady monthly income from a one-time lump sum investment. It comes with a fixed 5-year tenure and an attractive interest rate, currently 7.4% per annum (as of April 2024), paid out monthly.
- Eligibility: Open to resident Indian adults, jointly (up to 3 adults), or by guardians for minors/persons of unsound mind. Minors aged 10+ can also open accounts.
- Investment Limits: Minimum ₹1,000, maximum ₹9 lakhs for single accounts, and ₹15 lakhs for joint accounts. Deposits must be in multiples of ₹1,000.
- Interest Payout: Interest is credited monthly to a linked Post Office Savings Account or via ECS. Unclaimed interest does not earn further interest on its own within the MIS account.
- Premature Closure: Not allowed within 1 year. Deductions apply for closure between 1-3 years (2% of principal) and 3-5 years (1% of principal).
- Maturity: The principal amount is returned after 5 years.
The MIS + RD Advantage:
Instead of letting the monthly MIS interest sit idle or be spent, reinvesting it into a Post Office RD account can significantly boost your total returns. The RD account allows for regular monthly deposits and offers its own interest rate (compounded quarterly). Our calculator helps you visualize this potential:
- Calculate your monthly interest from the MIS investment.
- This monthly interest (rounded down to the nearest multiple of ₹10 for RD) becomes your monthly RD installment.
- Over the 5-year MIS tenure, these RD installments accumulate, earning compound interest at the prevailing RD rate.
- The result? Your MIS interest works harder, generating additional income through the RD.
This calculator demonstrates the MIS returns and then projects the growth if that interest is diligently invested in an RD, showcasing the combined benefit. It's a smart way to make your money work for you, maximizing returns from secure Post Office schemes.