Every person wants to invest their savings in a place where the money is safe and also gives good profits. In such a situation, post office savings schemes have always been the first choice of the people, which give great returns. One such great scheme is Public Provident Fund (PPF), which is a super hit among investors who want low risk and tax-free returns. It not only gives 7.1% interest, but a huge fund is also created by regular investment.
7.1% interest and 15-year lock-in period
Under the Public Provident Fund (PPF), the government is giving 7.1% tax-free interest annually to investors. This government scheme is great for those who fall in the high tax bracket, because the entire profit received in PPF is tax-free. It has got the status of EEE (Exempt-Exempt-Exempt), which means that the investment made in the scheme, the interest received on it, and the amount received on maturity, all three are tax-free. The lock-in period in this scheme is 15 years, which promotes disciplined saving.
Start investing with just ₹500
The Government of India itself guarantees the safety of your investment in the Post Office PPF scheme, and you can start investing with just a small amount of ₹500. A maximum lump sum investment of up to ₹1,50,000 can be made in the PPF scheme in a financial year. The special thing about this government scheme is that if you want to continue investing even after the lock-in period of 15 years, you can extend it for every 5 years.
How to create a fund of ₹40 lakh
Now, let’s talk about how investors can create a fund of more than ₹40 lakh on maturity of 15 years through this scheme. Suppose you invest a maximum of ₹1.5 lakh every financial year. For this, you have to save about ₹ 12,500 from your income every month.
If you deposit it continuously for 15 years at an interest rate of 7.1%, then your total deposit will be ₹ 22,50,000. At the same time, the guaranteed return on this will be ₹ 18,18,209. This means that your total fund will be ₹ 40,68,209 in the maturity period. You can increase or decrease the investment amount as per your convenience.
Loan and withdrawal facilities are also available
An account can be opened in any post office or bank under the PPF scheme. It also provides a loan facility on investment, and a loan can be applied for after the end of the financial year of the initial investment.
Not only this, the facility of partial withdrawal is also available in the PPF account after five years of opening the account. For example, if you have opened the account in 2020-21, then withdrawal can be done after 2026-27. This plan provides you with long-term savings as well as financial assistance when needed.