PPF Benefits- The benefit of compounding is available in PPF. By investing early and continuously in PPF, money grows and a person can create a corpus worth crores by retirement.
New Delhi. Public Provident Fund (PPF) is a popular savings scheme. Currently 7.1 percent annual interest is being given on PPF. If invested properly in PPF, this scheme can make any investor a millionaire. Compound interest is available on the money deposited in PPF account. This power of compounding increases money rapidly.
A minimum of Rs 500 and a maximum of Rs 1,50,000 can be deposited in the PPF account every year. The interest on this amount is added to the account on the last day of every financial year. Tax is paid on the amount deposited every year in the PPF account, the interest earned on this amount every year and the entire amount received at the time of maturity is tax free.
PPF will create such millionaires
PPF account matures in 15 years. But, the tenure of the account can be extended for five years even after maturity. If a person deposits Rs 1.5 lakh in PPF continuously from the age of 25 till retirement, then he will get Rs 2,26,97,857 on retirement.
If a person opens a PPF account at the age of 25, and deposits Rs 1.5 lakh in his account on April 1 every year, then Rs 10,650 will be deposited in the PPF account as interest on March 31 next year at an interest rate of 7.1 percent. Will be.
This will reduce the account balance to Rs 1,60,650 on the first day of the next financial year starting on April 1. If Rs 1.5 lakh deposited in the second financial year of account opening is added, this amount will increase to Rs 3,10,650. In the second year, the account holder will get Rs 22,056 interest on the amount of Rs 3,10,650. Similarly, if the investor keeps depositing Rs 1.5 lakh in the account on 1st April every year, then after completion of 15 years of maturity, there will be Rs 40,68,209 in the PPF account. Of these, Rs 22,50,000 will be the principal amount and Rs 18,18,209 will be interest.
Maturity will have to be increased by 5-5 years
An investor who has been investing since the age of 25 will turn 40 years of age on maturity of the account. After this, if the PPF account is extended for five years and the annual investment routine is maintained as before, then by the time the investor turns 45, the total amount deposited in the account will be Rs 66,58,288.
Now again he will have to extend the account for five years and invest continuously. Next time at the time of maturity, i.e. at the age of 50 years of the account holder, the total amount in the PPF account will be Rs 1,03,08,014. Once again, by extending the account for five years, the account holder will be able to invest Rs 1.5 lakh every year till he turns 55 years old. On maturity of five years, there will be Rs 1,54,50,910 in the PPF account.
