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Among the post office saving schemes, National Savings Recurring Deposit Account is one of the schemes that helps investors to form a capital to meet their future needs. Account can be opened by a single adult or as a joint account having maximum 3 adults. Recurring deposits are provided to help people invest their money through regular monthly deposits and earn interest at applicable rates. The deposits made every month will mature on a specific date in the future. In fixed deposits, you invest a lump sum amount and so the money earns interest till it reaches its maturity. However, in recurring deposits, the first installment earns interest for a 12 month period, the second installment for 11 months and so on. Due to this difference, fixed deposits are able to earn higher returns.
But when you are unable to make deposits in a lump sum, opting for a recurring deposit is the best way to make investments each month. The interest rate provided by the National Savings Recurring Deposit Account is 5.8% per annum which is quarterly compounded. So for example, if you make a monthly investment of Rs. 1000 for 5 years at the given rate of interest 5.8%, the total value you will receive is Rs. 70,064.