Parents want to save money for their children’s future, education, marriage, etc. But many are not sure which plan to invest in that offers safe and good returns.
The ideal one for this is the Public Provident Fund (PPF). It is considered one of the most popular and safest savings schemes. Since it is a government scheme, it is 100% guaranteed. It is not just a savings scheme. If planned properly, it can also be converted into an excellent retirement plan. The most important thing is that the returns are tax-free, which makes it one of the best long-term investment options available in the market.
Currently, investors in the PPF scheme are getting 7.1% compound interest per annum. This is higher than the interest rate offered by many banks in fixed deposit schemes. Investing is also very easy. Large amounts can be invested once a year. It can also be invested in convenient installments. This is an ideal scheme for those who want a stable monthly income after retirement – as it has the facility of converting savings into monthly income!
How This Pension Plan Works
The tenure of this plan is 15 years, but the account can continue operating even after 15 years. Even if no new contributions are made after 15 years, the account will keep earning interest at 7.1% on the existing balance.
If someone invests ₹5,000 every month, the total investment over 15 years will be ₹9,00,000. With interest, the account balance will grow to ₹16,27,284. After 15 years, the account will pay a monthly pension of ₹9,628.
Similarly, if ₹12,500 is deposited every month for 15 years, the total balance will reach ₹40.68 lakh. Even if no further contributions are made after retirement, this amount will continue earning interest of about ₹2.88 lakh per year. This means a monthly pension of approximately ₹24,000. Investors also have the option to withdraw a part of the capital once a year.
A PPF account can be opened at any nationalized bank or post office. The minimum deposit is ₹500 per year.