PPF Investment : If you want to have an additional source of income beyond your job by the time you reach 40, PPF can help you achieve this. Yes, you heard it right. The Public Provident Fund is considered a great long-term investment and offers tax benefits, but this scheme can also help you earn money. It can help you earn lakhs of rupees every year from the comfort of your home. However, you’ll need to adopt a specific strategy. Here’s how.

How will this miracle happen?

To earn interest from PPF without any contribution, you must first invest in it for 15 consecutive years, starting at age 25. PPF matures in 15 years. After 15 years, you will be 40 years old. Upon maturity, you will have the opportunity to earn free income from interest.

Understand how you will earn

After 15 years of continuous investment, your scheme will mature, but you are not required to withdraw this amount. If you do so, the amount deposited in your PPF account will continue to earn interest as per the PPF calculation. This is called PPF Extension Without Contribution. No application is required for extension without contribution; it is automatically applied if you do not withdraw the money after maturity. You can withdraw the entire amount from such an account at any time or let it remain deposited and earn interest on the deposit.

Understand how much money you will make from PPF in 15 years?

A maximum of Rs 1.5 lakh can be invested annually in PPF. You will need to deposit this amount annually for 15 years. This will result in a total investment of Rs 22,50,000 over 15 years. Calculating at the current interest rate of 7.1%, you will earn Rs 1,818,209 in interest, and you will have a corpus of Rs 40,68,209 upon maturity.

How much interest will you earn every year?

If you leave the maturity amount of Rs 40,68,209 in your account, it will earn annual interest at the current interest rate. Calculated at the current interest rate of 7.1%, this interest will be Rs 2,88,842. This way, you can earn lakhs of rupees in interest every year without any contribution. If calculated based on your monthly income, you will earn Rs 2,88,842/12 = Rs 24,070 per month. As long as this money remains deposited, it will continue to earn interest.

Option for extension along with contribution

PPF also offers the option of extension with contributions. However, you must apply for an account extension before the expiry of one year from the maturity date. Extending with contributions extends the account for a straight five-year period. You can extend PPF as many times as you like in blocks of five years.

The PPF interest rate has been 7.1% for a long time, so the calculations here are based on this rate. However, the government reviews interest rates every three months, so this interest rate may change in the future. If the interest rate changes, the calculation of the return will also change.

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