Public Provident Fund: If you get a job at the age of 23 to 24 years, then the next 4 to 5 years are enough to make yourself financially stable. After 5 years of a job, your salary may be so much that you start thinking about investing in a better scheme for a long time. If you are planning investment keeping in mind your better future, then the Public Provident Fund (PPF) can be very useful for you. Through this, while you can plan for early retirement by creating a big corpus, you can also arrange for regular income after retirement.
The Public Provident Fund is a government scheme designed for long-term investment. It is especially popular among the salaried class. The maturity of PPF is 15 years, but if the investor wants, he can extend it for 5 years at a time. In this way, this scheme can also be maintained during the entire job period. If you take proper advantage of this rule related to extension, then your future can be financially secure to a great extent.
How big is the fund from 28 to 53 years of age
If you start a PPF account at the age of 28 and maintain it till the age of 53, it means that after the maturity of 15 years, you extend it twice for 5-5 years.
Let us take an example to understand how big a fund you can build:
Maximum deposit in a financial year: ₹1.50 lakh
Current interest rate: 7.1% per annum (subject to change)
Status after 15 years:
Total deposit in 15 years: ₹22,50,000
Total fund after 15 years: ₹40,68,209
Extending this twice (for 10 years):
Total deposit in 25 years: ₹37,50,000
Total fund after 25 years: ₹1.02 crore
This shows how you can make the most of PPF and become a crorepati before retirement, just by regular and disciplined investing.
What are the benefits of increasing PPF
The biggest advantage of increasing this savings scheme is that you can create a big corpus through it till retirement, which can be up to ₹ 1 crore. Also, on retirement, you will get a good amount from the EPF account. In such a situation, your old age will be completely tension-free.
The second advantage is that after the maturity of 15 years or after running the scheme for 20 years or 25 years if you want, you can increase it without making any investment. By doing this, whatever your closing balance will be after 15 years, 20 years, or 25 years, you will continue to get the current interest (which is currently 7.1% per annum). Keep in mind that if you continue investing, the scheme will continue to work normally.
Regular income on a closing balance of ₹1 crore
If you want to earn monthly from it after building a fund of ₹1 crore in 25 years, you can take advantage of extending it. If you extend the plan for 5 years without making any investment, you will continue to earn annual interest on the closing balance. Also, you can withdraw any percentage of the entire amount once every year. It can be up to 100%.
Here, a closing balance of ₹1 crore will earn 7.1% annual interest. This will be ₹7,31,300 in a year. You can withdraw this entire interest amount once a year. If you divide it over 12 months, it will be around ₹60,000 per month. The best part is that there will be no tax on this withdrawal, as the interest earned in PPF is tax-free.