According to tax and investment experts, current PPF interest rate of 7.1 per cent is still considered enough to beat the rise in inflation during the investment period
PPF calculator: Public Provident Fund or PPF account is a tax saving-cum investment tool which is completely risk-free. It is one of the central government-backed small saving schemes that give higher yield in long-term. According to tax and investment experts, current PPF interest rate of 7.1 per cent is still considered enough to beat the rise in inflation during the investment period. They said that PPF account matures in 15 years but it can be extended in the block of 5 years for infinite number of times. So, for those who want to save for their retirement corpus, PPF account can be used as a long-term risk-free investment option. If a person invests in PPF for long-term, he or she will get benefit of compounding of the interest during the tenor of investment.
Speaking on the PPF account features SEBI registered tax and investment expert Jitendra Solanki said, “PPF account can be used for retirement fund accumulation but for that one will have to submit application in the bank or post office (wherever the PPF account is) for extending the PPF account for next five years. The PPF account holder will have to submit the application in the given format during the 15th year of the PPPF account opening. One can keep on extending it in five years block for infinite number of times. So, if a person opens a PPF account by the age of 30, it can easily continue investing in it for 30 years by using the 5 year extension feature of the PPF account.”
On how PPF account can help a n investor with low risk appetite to create retirement corpus Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “If a person ha low risk appetite then he or she will have to start saving as early as possible may be at the age of 30. If he chooses a PPF account and invests ₹9,000 per month, then after the maturity of 15 years, the PPF balance will be ₹29,29,111.”
However, if the PPF account holder uses extension benefit and avails compounding benefit for next 15 years, then he or she will be able to grow ₹1,11,24,656 or ₹1.11 crore.
So, the above PPF calculation is enough to understand how PPF account is useful in creating retirement corpus with risk-free investment.
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