The Public Provident Fund or PPF has instilled confidence and trust among generations of Indian citizens. It was launched in 1968 and between 1986 and 2000 offered a peak interest rate of 12%. Though the interest rate has come down to 7.1%, it still continues to hold a top-of-the-mind recall among the people of this country as a source of funds at retirement.
PPF: How to build Rs 1 crore corpus
PPF enables just about anyone to invest an amount to build a corpus for the long-term and the entire amount (principal, interest and maturity) is completely free from income tax. It is also completely safe.
Let’s see how much does one need to deposit to build a corpus of Rs 1 crore and 1.5 crore in PPF.
Flexible frequency
One can make investments in PPF monthly, quarterly, half yearly or even once a year.
Let’s consider a person investing Rs 1.5 lakh (the maximum that is permitted in a year) once a year.
Calculation for 25 years
Assuming the interest rate remains at 7.1%, the total amount that will be generated in 25 years is Rs 103,08,014 or Rs 1.03 crore.
The point to note is that one can pace the frequency according to one’s convenience. You can invest every month and yet reap the same benefits.
Importance of the 5th day
However, one must note that one has to invest the amount before the 5th day of every month in order to get the interest for that month.
Therefore, in order to achieve the same amount as above one can invest Rs 12,500 every month for 25 years.
Calculation for 30 years
Now let’s extend the investment for 30 years. If one has the patience and discipline, PPF would generate a total corpus of Rs 154,50,910 – well over Rs 1.5 crore – for you.
It’s not very difficult if one begins at the late age of 30. He/she would have the pool available when he/she turns a senior citizen.
Asset building for the very long term
PPF comes with a lock-in period of 15 years. However, after the expiry of the lock-in period, an investor can extend the period of investment by blocks of 5 years.
Therefore, anyone can invest for 20, 25, 30, 35 years or even beyond, generating a huge corpus very securely.
PPF calculator: The Public Provident Fund is a widely trusted instrument for Indian taxpayers. It allows anyone to build a significant corpus that can be utilised during the later years of life. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
