PPF: If you’re seeking a low-risk investment with guaranteed returns and tax benefits, the Public Provident Fund (PPF) government scheme is a great choice. The PPF has a deposit term of 15 years, which can be extended in increments of 5 years. This is a fantastic way to build a solid retirement fund.
What is the minimum investment for PPF?
An individual can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh each year in a PPF account. Currently, the government provides an interest rate of 7.10% per annum on PPF. The interest on PPF is compounded annually, meaning you earn interest on your interest.
How saving Rs 12,000 a month can make you a millionaire?
If you contribute Rs 12,000 every month (which totals Rs 1.44 lakh annually), the maturity value of your PPF after 15 years will be around Rs 39.05 lakh. Your total investment will amount to Rs 21.6 lakh, and the interest earned will be Rs 17.45 lakh. If you keep investing for 20 years, your fund will grow to about Rs 64 lakh, and it could reach approximately Rs 1 crore in 25 years.
What will you have if you save Rs 10,000 each month?
If you save Rs 10,000 monthly (Rs 1.2 lakh annually) and invest it, you can expect to have around Rs 32.5 lakh in 5 years. Out of this, Rs 18 lakh will be your investment, and Rs 14.5 lakh will be the interest earned. If you opt for a 5-year extension and continue for 20 years, you will accumulate Rs 53.2 lakh in 20 years, and Rs 82.4 lakh in 25 years.
What will you earn if you deposit Rs 5,000 monthly in PPF?
If you invest Rs 5,000 each month (Rs 60,000 annually) at an interest rate of 7.10%, you will have about Rs 16.2 lakh after 15 years. Your total investment will be Rs 9 lakh, with interest amounting to approximately Rs 7.2 lakh. If you extend this for another five years, or continue to deposit for a total of 20 years, you will reach Rs 26.6 lakh. If you invest for 25 years, your total will be Rs 41.2 lakh, with interest alone exceeding Rs 26.2 lakh.
How to earn interest on PPF?
PPF interest is calculated on the lowest balance between the 5th of each month and the last day of the month. Therefore, to earn higher interest, you should deposit money into your account before the 5th of each month. You can make the deposit in 12 monthly installments or in a lump sum.
PPF Scheme Tax Exemption
PPF is one of the most tax-effective schemes, as it falls under the EEE (Exempt-Exempt-Exempt) category. This means that a maximum of Rs 1.5 lakh deposited into PPF is tax-free under Section 80C. Furthermore, the interest earned on the account is also completely tax-free. The full maturity amount received after 15 years is tax-free.