If you are looking for a safe and tax-free investment option, then the Public Provident Fund (PPF) scheme of the post office can be the best for you. This scheme is very popular among those investors who want to avoid risk and want guaranteed returns. In this, not only is your money completely safe, but you also get an attractive interest of more than 7.1% on it. Let’s understand the benefits of this tremendous scheme and the complete math of investment.
Why is PPF the most special
PPF is considered the best for investment, especially for those who fall in the high tax bracket. Its biggest feature is its EEE (Exempt-Exempt-Exempt) status. This means that whatever money you put in this scheme, it gets tax exemption under section 80C of Income Tax. The interest you get on your investment is also completely tax-free. And when the scheme is completed after 15 years, the entire amount received on maturity is also tax-free. This scheme comes with a lock-in period of 15 years, but you can extend it every 5 years.
How to start investing and how much money can you deposit
Investing in PPF is very easy. You can open your account in any post office or bank. The best thing about this is that you can start investing with just ₹ 500. You can invest a maximum of ₹ 1.5 lakh in a financial year. The money deposited in this scheme is guaranteed by the Government of India itself, making it the safest investment option.
How to create a fund of ₹ 40 lakh
It is possible to create a large fund from small savings in PPF. Let’s understand its math. If you deposit ₹ 12,500 every month, i.e., ₹ 1.5 lakh annually, then in 15 years your total deposit amount will be ₹ 22,50,000. On this, you will get interest of ₹ 18,18,209 at the rate of 7.1% per annum. In this way, you will get a total of ₹ 40,68,209 on maturity. You can also increase or decrease the investment amount as per your convenience.
Loan and partial withdrawal facility
Apart from investing in a PPF account, you also get the facility of a loan and withdrawal of money when needed. You can apply for a loan on your deposit from the third financial year of opening the account, and can also make a partial withdrawal after five years of opening the account. For example, if you have opened an account in 2020-21, you can withdraw money after 2026-27. This scheme is an excellent option for long-term investment, which gives you both financial security and great returns.