Public Provident Fund: People trust the schemes of the post office. You too can become a millionaire by investing in this scheme. Excellent interest is available in this scheme. Let us tell you how you can take advantage of this scheme.
New Delhi. Investing in the post office can prove to be a safe and profitable investment. There are savings schemes in the post office with maturity from 1 year to 15 years. If you have a long-term investment horizon, then you should invest in Public Provident Fund (PPF). The maturity of this scheme is 15 years, while interest is also getting better on it as compared to FD or RD.
Maturity is 15 years
The interest on Public Provident Fund (PPF) is 7.1 percent per annum compounding. The maturity of this scheme is 15 years, but it can be extended for another 5 to 5 years even after maturity. If you do not need the fund at the maturity of 15 years, then you can carry it forward. This will give you more benefit of compounding. The maximum amount that can be deposited in this scheme is 1.50 lakh annually. Instead of depositing 1.50 lakh in a year, you can also take the option of depositing Rs 12500 every month. You can also take advantage of tax exemption under 80C of Income Tax Act from PPF account. The interest and maturity income earned in this is also tax free.
PPF calculator: 18 lakh interest on 22.5 lakh deposits
- Maturity: 15 years
- Monthly investment: Rs 12,500
- Investment in a year: Rs 1.50 lakh
- Total investment in 15 years: Rs 22.50 lakh
- Annual interest rate: 7.1%
- Maturity Amount: Rs 40.70 lakh
- Interest Benefit: Rs 18.20 lakh
Scheme can be extended even after maturity
The advantage of PPF is that even after maturity, this scheme can be extended for 5 years for 5 years. Based on the current interest rates, if you want to make a corpus of 1 crore from this scheme, then it will have to be extended for 2 times 5 years after maturity.
This is how a fund of 1.5 crores will be made
You can invest a maximum of Rs 1.50 lakh in a PPF account in a year. Suppose, you invest Rs 12,500 every month in a PPF account. After maturity in 15 years, you can extend your PPF account in blocks of 5-5 years. In such a situation, after 30 years, the entire fund of your PPF account will be more than 1.5 crores (1,54,50,911). In this, your investment will be 45 lakhs and interest income will be around Rs 1.09 crores.
You can start investing in 25 years
Let us tell you that the sooner you start investing in this government scheme, the more it benefits. Suppose you are 25 years old and you invest 1.5 lakh rupees annually in PPF, then at the age of 55, that is, about 5 years before retirement, you can become a millionaire.
How is interest calculated on PPF?
Interest is calculated every month on PPF, but it is credited to the account at the end of the financial year. That is, whatever interest you earn every month is put into your PPF account on March 31. However, there is no fixed date for when to deposit money in the PPF account. You can deposit money in PPF monthly, quarterly, half yearly and annually.
