PPF is a long-term investment that anyone in India can access and profit from. It is an investment tool that can offer a huge return on maturity. PPF serves as the best investment opportunity for any investor to start off his investment journey. In fact, in PPF, there is no loss, only gain and that is something that very few other investment tools can offer. To ensure maximum profit, an investor should know all about PPF interest rate tips and tricks that he must use. Among these, there is one that must be followed by a PPF investor as far as possible to make sure he maximises his gains. If he does not, he will lose a big amount that was coming to him. So, what is this big Public Provident Fund tip?
PPF ‘Safe as Houses’
PPF scheme is backed by the government of India. That means whatever the interest rate promised in a specific year, the investor would get it. Not just that, there is no chance of the investor’s money reducing in any way. There is no risk. Over and above that PPF is also tax free. You do not pay any tax on the interest or the principal amounts. On top of it, you get tax deduction under Section 80c.
PPF interest rate tips and tricks
While there are many that are important, like not withdrawing any money from your PPF account before maturity, making regular contributions year-after-year and so on, there is one that can be the difference between a huge gain or a small gain. In fact, if this PPF trick is not followed, an investor, instead of gaining, would actually lose out.
Notably, PPF interest rate is currently at 7.10%. Once it used to be much higher, but the government has been reducing it and now it just about matches bank fixed deposit rates at the higher end of the spectrum. In fact, currently, some banks are offering FD interest rates higher than this.
Be that as it may, the PPF trick that will earn you a lot of money is that you must invest the full PPF limit allowed by the government before April 5 every year. The limit is Rs 150000. The reason behind that is the PPF investor will get interest for the entire 12 months! Paying Rs 12500 in monthly installments will mean you will not earn the highest interest that PPF would otherwise have offered.
What is the difference? Let us say that an investor invests Rs 1.5 lakh before April 5 every year. On maturity after 15 years, the high PPF interest rate will give him a sum of:
PPF Maturity Amount: Rs 40,68,209
Total Amount invested: Rs 22,50,000
Total Interest earned: Rs 18,18,209.
However, if the same PPF investor were to invest Rs 12500 in monthly installments for the 12 months, he will get a much lesser amount even though he ended up investing the same amount – Rs 22,50,000:
PPF Maturity Amount: Rs 39,44,599
Total Amount: Rs 22,50,000
Total Interest: Rs 16,94,599
In effect, the PPF investor stands to lose a whopping Rs 123,610! Something that must not be allowed by a focused investor.
Note: The sums mentioned here are estimates, the actual amounts would be provided in the PPF passbook.
PPF interest rate tips and tricks: Every PPF investor must remember to follow this deadline to maximise his profit from PPF interest rate. Check what calculator showed. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
