PPF Account: For every parent, planning financially for their children’s secure future is a top priority. Whether it’s for educational costs or the start of their careers, investing early is often seen as the smartest choice. While there are numerous market-linked investment options, the Public Provident Fund (PPF), backed by the Government of India, remains the most favored and safest method to accumulate a substantial corpus with minimal risk.

If you invest Rs 5,000 each month for your child, let’s explore how much you will have after 15 years and the associated rules in simple terms. How much will you accumulate in 15 years by investing Rs 5,000 monthly?

Currently, the government provides a 7.1% annual interest rate on PPF. Assuming this rate stays the same, the calculations for your Rs 5,000 monthly investment (Rs 60,000 annually) will be as follows:

Monthly Investment: Rs 5,000

Annual Investment: Rs 60,000

Total Capital Accumulated in 15 Years: Rs 9,000,000 (Rs 9 lakh)

Total Interest Earned: Rs 727,284 (approximately Rs 7.3 lakh)

Maturity Value after 15 Years: Rs 1,627,284 (approximately Rs 16.3 lakh)

It’s important to note that the government reviews PPF interest rates quarterly, so the final maturity amount may vary.

 

Rules for Opening a PPF Account in a Child’s Name: Remember the Rs 1.5 lakh Limit

 

Parents or legal guardians can open a PPF account for their minor child. However, there is a crucial rule to remember: The total deposits in both your PPF account and your child’s PPF account must not exceed Rs 1.5 lakh in a financial year. If you are already contributing the maximum limit of Rs 1.5 lakh annually to your own PPF account, you will not be able to make a separate deposit in your child’s account.

 

Power of compounding and option to extend beyond 15 years

The biggest advantage of PPF isn’t just the interest rate, but compounding and time. The initial interest amount may seem small, but as the years go by, the interest accrues, and your fund grows rapidly. After the 15-year maturity period, if you don’t need the money immediately, you can extend the account in 5-year blocks. This will create a substantial corpus by the time your child completes higher education.

 

Bumper benefit of triple tax exemption (EEE)

 

PPF is one of the few schemes in the country that falls under the EEE (Exempt-Exempt-Exempt) category:

 

Tax exemption (Section 80C): The amount deposited is eligible for exemption under Section 80C of Income Tax.

 

No tax on interest: The interest earned every year is completely tax-free.

 

Zero tax on maturity: There is no tax on the entire amount received at the time of maturity.

 

Is PPF the right option for your child?

PPF is a long-term, locked-in product. If you’re looking to save for a shorter period of 3-4 years, it’s not the right choice because of its strict partial withdrawal rules. However, after 15 years, it’s a reliable and zero-risk investment for college fees, professional courses, or your child’s financial well-being.