New Delhi: The Public Provident Fund (PPF) is a popular scheme among investors. Many people consider PPF to be a good scheme for retirement funds. But, PPF can also be a good investment option for your child. The Public Provident Fund is a government scheme to promote long-term investment with a maturity period of 15 years. You can open a PPF account for your child as a guardian.
Start early investment in PPF
PPF scheme can make your children a millionaire as soon as they start a job or even before joining the job. There is no age limit for opening a Public Provident Fund account. You can open an account in the name of your minor children, irrespective of their age. To reap the most benefits, you should start your child’s financial planning as soon as possible. A guardian manages the account of a minor. Once children turn 18 years of age, they get control of the account.
How much you can invest in PPF?
The lock-in period in PPF is 15 years. A minimum of Rs 500 and a maximum of Rs 1.50 lakh can be deposited in a financial year. Suppose you open a PPF account when your child is less than 1-year-old. After 15 years, the scheme will mature. If you choose to extend the scheme, then your child can manage the account after turning 18 years. The interest rate on PPF for the quarter of April to June 2024 is 7.1 percent compounded annually.
PPF investment: How to earn 1 crore
If a minimum of Rs 500 is not deposited in a financial year, the PPF account is closed. A closed account can be reopened by the depositor before maturity by depositing minimum subscription i.e. Rs 500 and a fee of Rs 50 for every default year. Now let’s calculate how you can your child become a millionaire by investing in PPF.
Maximum deposit in a financial year: Rs 1.50 lakh
Interest rate: 7.1 percent compounding annually
Amount on maturity after 15 years: Rs 40,68,209
Total investment: 22,50,000
Interest benefit: Rs 18,18,209
After the account matures, it will have to be extended twice for 5 years and 5 years. That means it will have to be held for 25 years. Now it can be calculated like this.
Maximum monthly deposit: Rs 1.50 lakh per annum
Interest rate: 7.1 percent compounding annually
Amount on maturity after 25 years: Rs 1.03 crore
Total investment: Rs 37,50,000
Interest benefit: Rs 65,58,015
Tax benefits
There are three types of tax benefits available on this scheme. You can claim deductions of contributions made to PPF under section Section 80C of the Income Tax Act. Under 80C, a total of 1.5 lakh is allowed as a deduction. You don’t have to pay tax on interest earned on PPF. However, investing in your minor’s name will not yield you the desired tax benefits.
How to make Rs 1 crore by investing in PPF: You can open a Public Provident Fund account in the name of your minor children, irrespective of their age. Investors can enjoy Income Tax benefits by investing in PPF. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
