PPF Investment Plan: The government has not made any changes in the interest rates of small savings schemes for the July-September 2025 quarter (Q2FY26), which means that you will still get a guaranteed interest of 7.1% on PPF. In this article, we will tell you a special ’15+5+5′ strategy to invest in PPF, so that you can create a fund of ₹ 1.03 crore in 25 years and also get a pension of ₹ 61,000 every month from the interest received on this amount. PPF is one of the most reliable and safe investment schemes, which is guaranteed by the government.
Why is PPF so special
Investing in PPF is completely risk-free, as it has a government guarantee on your principal. The 7.1% interest on it is compounded annually; that is, interest is earned on your money, and then interest is also added on that interest. This power of compounding makes PPF so special.
Apart from this, the interest earned in PPF and the entire amount received on maturity are completely tax-free. It comes under the ‘EEE’ (Exempt, Exempt, Exempt) category, which means that there is no tax on the amount invested, the interest received, and the maturity amount. You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh every year in this scheme.
How to create a mega-fund of ₹1.03 crore
The basic tenure of the PPF scheme is 15 years. But after the completion of 15 years, you have two great options:
- You can withdraw your entire amount.
- You can take two extensions of 5 years each. In these 10 years, you can either not make any new investment or continue investing. If you continue investing, your fund will become very big.
Let’s understand the math behind the ’15+5+5′ strategy:-
Investment for the first 15 years
- Invest ₹1.5 lakh every year.
- This way, the total investment over 15 years will be ₹22.5 lakh (15 x ₹1.5 lakh).
- At an interest rate of 7.1%, your fund will grow to ₹40.68 lakh after 15 years.
- Of this, around ₹18.18 lakh will come from interest.
Extension for the first 5 years
If instead of withdrawing the money after 15 years, you don’t make any new investment for the next 5 years and let the account continue, then:
- On completion of 20 years, your fund will grow to ₹57.32 lakh.
- About ₹16.64 lakh will be added as interest during this period.
Second 5-year extension
If you take another 5-year extension after 20 years (without any fresh investment), then:
- Your fund will grow to ₹80.77 lakh at the end of 25 years.
- During this time, you will earn around ₹23.45 lakh from interest.
The real magic of 15+5+5
If you continue to invest ₹1.5 lakh every year during these 10-year extensions, then:
- Your total investment in 25 years will be ₹37.5 lakh (₹22.5 lakh for 15 years + ₹15 lakh for 10 years).
- And your fund will grow to ₹1.03 crore.
- That is, you will earn a handsome ₹65.58 lakh from interest.
How to earn a ₹61,000 monthly income from a fund of ₹1.03 crore
After 25 years, when your fund grows to ₹1.03 crore, you can keep this amount in your PPF account. You will continue to earn 7.1% interest on this amount every year. At 7.1% annual interest, you will earn around ₹7.31 lakh every year. This means you will get around ₹60,941 (₹7.31 lakh ÷ 12) every month. The best part is that your principal amount of ₹1.03 crore will remain the same! You can use the interest amount every month as your ‘pension’ or regular income, while your principal fund will remain safe and will keep growing.