Post Office vs Bank FD: Best 3-Year Investment for Rs 5 Lakh

Choosing between a post office fixed deposit and a bank FD for a three-year investment depends on interest rates and security.

Post office time deposits offer 7.1 percent interest for three years, ensuring stable returns. The government backs these deposits, making them a secure option.

Bank FDs vary across institutions. Some private banks offer up to 7.5 percent interest, while public sector banks provide slightly lower rates. However, bank FDs offer flexibility, allowing premature withdrawals with minimal penalties.

For a ₹5 lakh investment, a post office FD would yield ₹6.14 lakh after three years, while a high-interest bank FD could generate ₹6.17 lakh. The difference is marginal, but liquidity and accessibility favor bank FDs.

Post office deposits suit conservative investors seeking guaranteed returns, while bank FDs cater to those needing flexibility. Evaluating interest rates, withdrawal terms, and financial goals helps in making the right choice.