PPF update: The Public Provident Fund or PPF is one of the most popular long-term investment options in India. It is a small government-backed high-yield savings scheme intended to create long-term wealth for investors after retirement. Introduced in 1968 by the National Savings Institute of the Ministry of Finance, the PPF has become a powerful tool for Indians through which they can avail tax benefits. The scheme has become one of the most sought after investment options due to the security, returns and tax benefits it offers. This is a 100% risk-free investment as the fund is backed by the Indian government and it does not move with exchange rates which tend to change from day to day.
How to get the most benefits from your PPF account?
Investors can invest their money in their PPF account for up to 15 years in a row, according to the guideline. However, if one does not need the money after 15 years, he can extend the term of the PPF account for as many years as needed. This can be done in blocks of five years by submitting a PPF Account Extension Form. Being one of the very few schemes to fall foul of the EEA rule, investors are advised to keep the money in their PPF accounts, even if they don’t contribute anything, to also gain the maximum benefit by under tax rules.
The PPF interest rate, currently set at 7.1%, is one of the highest in terms of government-backed fixed income products. So, if you invest Rs 1.5 lakh per year for 15 years, you get almost 41 lakh at maturity.
Invest Rs 250 daily, get Rs 62 Lakh from PPF
If you invest Rs 250 per day in your PPF account, the monthly investment value amounts to around Rs 7,500. This means that per year, you invest a little more than Rs 91,000 in your Public Provident Fund account. If you continue to do so from 25 to 50, i.e. for 25 years, the amount you will get at maturity will be Rs 62.5 lakh. This amount will be completely tax free and the total interest earned will be almost 40 lakh. The total amount you would have deposited in 25 years will turn out to be Rs 22.75 lakh.
However, if you cannot invest such a sum, you have no mandate to do so. The public provident fund is flexible in nature in terms of investment as individuals can invest as little as Rs 500 per annum in their accounts. PPF accounts can be opened online or one can also visit their banks to create the account.
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