PPF Calculator: All parents aspire to secure a prosperous future for their children through long-term financial planning. The Public Provident Fund (PPF) stands out as a dependable government savings scheme in the country, offering guaranteed returns without any risks. Parents can utilize the PPF to finance their children’s higher education, overseas studies, marriage, or to build a substantial wealth fund. Parents or legal guardians have the opportunity to open a PPF account in the name of their minor child at any bank or post office. Once the child reaches 18 years of age, the account status is altered to “Major.” To put it simply, consider the scenario of investing Rs 5,000 every month for your child. Through the power of compounding, calculate how much wealth they could amass by the age of 60.
PPF currently offers an annual interest rate of 7.1%. The age at which you start investing for your child has a significant impact on the total corpus they will receive at the age of 60 (retirement). Understand from the data given below how much money will be received at the age of 60 if you invest Rs 5000 monthly at different ages of your child :
Starting at age 10 (investment period of 50 years): The total deposit amount will be Rs 30 lakh. Interest alone will earn over Rs 2.40 crore. The total maturity value at age 60 will be over Rs 2.70 crore. Starting at age 12 (investment period of 48 years): The total deposit will be Rs 28.80 lakh. Interest earned on this will be over Rs 2.05 crore. The total maturity value at age 60 will be over Rs 2.34 crore.
Starting at age 15 (investment period of 45 years): The total deposit will be Rs 27 lakh. Interest earned on this will be over Rs 1.62 crore. The total maturity value at age 60 will be over Rs 1.89 crore.
Starting at age 18 (investment period of 42 years): The total deposit will be Rs 25.20 lakh. Interest earned on this will be over Rs 1.27 crore. The total maturity value at age 60 will be over Rs 1.52 crore.
Just a delay of 8 years and a loss of Rs 1.25 crore!
The calculations above clearly show how even a small delay in starting investments can shrink your child’s final fund. If you start investing when your child is 10 years old, the fund will amount to Rs 2.70 crore. However, if you delay investing by just 8 years and start when they turn 18, this fund will shrink to Rs 1.52 crore. This means that a delay of just 8 years will result in a significant loss of over Rs 1.25 crore for your child.