Personal finance experts believe that if you want to take full advantage of PPF, then keep the ‘special’ date in mind. If you invest in PPF in the first 5 days of the month, you will get more benefits. 7.1 percent interest is being given on PPF.
Public Provident Fund (PPF) is the best scheme for investment. But why? Because, along with good interest, tax benefits are also available here. Many times people are confused about when to invest in this scheme (Public Provident Fund)? Invest together or invest money every month? Personal finance experts believe that if you want to take full advantage of PPF, then keep the ‘special’ date in mind. If you invest in PPF in the first 5 days of the month, you will get more benefits. 7.1 percent interest is being given on PPF. Interest revision is reviewed every quarter. Interest in PPF account is calculated under monthly compounding.
What is the connection of special date in PPF?
The investor should deposit money in the PPF account by the 5th of every month. If deposited after 5th of that month, interest on the deposited amount is not available. Every month the interest is calculated on the minimum amount between the 5th and the last date of the month.
Return calculations will get messed up
Let’s start with the new financial year. You started investing from April. The first 5 days of April will be very important. Because, if you deposit Rs 1.5 lakh in PPF by April 5, you will get a total interest of Rs 10,650 in the financial year at the rate of 7.1 percent. But, the twist is here, if you deposit this money on or after April 6, then the interest received in the financial year will be calculated for 11 months. Meaning one month’s interest is lost. In this case you will get interest of Rs 9,763. Meaning you will get less interest of Rs 887. So the return calculation went wrong. The 5th of this month is very important.
Should we invest every month?
If you want to earn more interest on your PPF, then instead of investing every month, invest all the money at the beginning of the financial year. The limit for investing in PPF in a year is Rs 1.5 lakh. If you are planning to invest the entire Rs 1.5 lakh or the amount you are planning to invest in a year, between 1st and 5th. Apart from this, if you are planning to invest every month then invest the money on or before the 5th.
Some special things related to PPF investment
- Apart from banks, PPF account can also be opened in post office.
- Initially it is opened for 15 years.
- Later it can be extended in blocks of 5-5 years.
- Money can be deposited in this account minimum once in a year and maximum as many times as desired.
- You can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakh once in a year.
- The interest rate in PPF scheme is revised every three months.
- At present 7.1 percent interest is being given on PPF account.
- PPF account can be opened both single and joint.
- Facility to make nominee is also available in PPF.
- PPF account can be transferred from bank to post office or from post office to bank.
You can earn Rs 2.71 lakh by depositing Rs 10 thousand
Suppose you deposit Rs 10 thousand every year in PPF account, then according to the current interest rate, after 15 years it will be Rs 2 lakh 71 thousand 214. The total deposit amount in 15 years will be Rs 1.5 lakh and the income in the form of interest will be Rs 1 lakh 21 thousand 214. A total of Rs 2.71 lakh will be received which will also be completely tax free.
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