PPF Monthly Investment: Everyone dreams of having their own roof over their head. Whether you live in a city or a village, the desire to own a home is special for everyone. To help fulfil this dream, the Government of India has introduced long-term savings schemes like the Public Provident Fund (PPF). This scheme not only provides safe and good returns in the long term, but also helps in saving taxes. You can start investing in PPF with a small amount, and this amount can grow over time.
What is the PPF investment scheme?
PPF, or Public Provident Fund, is a popular savings scheme whose primary objective is to promote small savings and build a substantial corpus over the long term. Its maturity period is 15 years, which can be extended in 5-year blocks. Currently, it offers an annual interest rate of 7.1%, which is reviewed quarterly by the government. The most significant feature of PPF is that it comes with EEE status, meaning the investment, interest, and maturity amount are all tax-free.
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How much will you receive upon maturity if you invest ₹5,000 per month?
If you invest ₹5,000 per month in PPF, your total deposit and interest, combined, could amount to approximately ₹16.27 lakh after 15 years. Your total investment will be ₹9 lakh, and the interest earned will be around ₹7.27 lakh.
If you extend the investment by another 5 years and continue investing for 20 years, the total maturity amount could be approximately ₹26.63 lakh. These calculations are based on the current 7.1% interest rate, and actual returns may vary slightly over time. PPF interest is calculated on a monthly basis and is calculated based on annual compounding.
The biggest benefits of PPF
Investing in PPF has several advantages. First, it is tax-free. Investments up to ₹1.5 lakh annually are eligible for tax deduction under Section 80C. Furthermore, the interest earned on maturity and the entire amount are also tax-free.
The maturity period of a PPF account is 15 years, but you can extend it in 5-year blocks. During this period, you can continue making new investments or earn interest on your existing balance without investing.
The third advantage is the loan facility. From the third financial year of opening a PPF account to the sixth financial year, you can take a loan of up to 25% of your deposit. The interest rate on this loan is only 1% higher than the current PPF rate.
The fourth advantage is security. Since this scheme is government-backed, your money is completely safe. Deposits in a PPF account cannot be seized due to any court order or loan.
The fifth major benefit is the option of partial withdrawals. In certain circumstances, such as children’s education or treatment for a serious illness, you can make partial withdrawals from your PPF account after five financial years.
How and Where to Open a PPF Account
You can open a PPF account at any bank or post office branch. It can be opened in your own name or in the name of minor children. For minors, the guardian will manage it until they reach the age of 18. An individual can open only one PPF account, and a new account cannot be opened in the name of an HUF.
Lock-in Period for Investments
PPF investments have a lock-in period of five years. This means you cannot withdraw funds for five years from the date of opening the account. After this, partial withdrawals can be made by filling out Form 2 for pre-withdrawal. The entire amount cannot be withdrawn before maturity.
PPF is safe and reliable
The biggest advantage of investing in the PPF scheme is that it cannot be seized by anyone under a court or debt order. The government guarantee ensures your money is completely safe, making it a reliable investment option in the long run.