HaatBeatHow it's calculated
Each year: balance = (balance + deposit) × (1 + r)
Maturity = D × ((1 + r)^n − 1) ÷ r × (1 + r)
D is the yearly deposit, r the yearly rate as a decimal and n the number of years. Depositing at the start of the year earns a full year of interest on it.
Assumptions
- One deposit at the start of each financial year.
- The rate you enter stays the same; the government sets the real rate each quarter.
- Interest is added once a year. The scheme works it out monthly on the lowest balance, which this matches when deposits are made early.
- Withdrawals and loans from the account are not included.
Worked example
Depositing 1,50,000 rupees at the start of each year for 15 years at 7.1% could grow to about 40,68,209 rupees.
Questions
Why deposit early in the year?
Interest for each month is worked out on the lowest balance between the 5th and the end of the month, so money deposited early earns for longer.
Can I keep the account after 15 years?
Yes, in blocks of 5 years, with or without new deposits. Set the years to 20, 25 and so on.
Which rate should I use?
The current rate announced by the government. It can change every quarter, so try a lower rate too.
Sources
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