Wealth creation for most people is quite tough to do. They are mostly into jobs and trying to save on expenses to make their money grow. However, this will only go so far and no farther. In terms of wealth generation, clearly there is a huge requirement to do something more. And the best option open for everyone, young and old, is the Public Provident Fund (PPF). In fact, the earlier a PPF account is opened, the better it is for the person concerned. The reason behind it is that it gives the power of compounding the time it needs to do its magic!
It is recommended that even those who already have an Employees’ Provident Fund (EPF) open a PPF account even though they may exceed the income tax benefits allowed in Section 80c. Both these long-term wealth generation investment tools are safe as houses, so to speak, and that is exactly what the general public is looking at for its money to start with, at least.
So, let us assume that an investor starts his PPF journey at the age of 20 and keeps investing a sum of Rs 8500 on a monthly basis for years on together. The return will be a massive amount of money that the investor can then use to buy a house, a car or other big-ticket assets, as well as ensure a regular flow of steady income for the rest of his life. There are only three important things that need to be ensured: 1. That no withdrawals should be made during the extended period; 2. no contributions should be missed, and 3. PPF account be extended in a block of 5 years multiple times after the initial 15-year period is over.
So, let us make an assumption that the investor makes this contribution for an extended period of 35 years – the journey starts at 20 and ends at the age of 55 years. Yes, let us also assume that the investor wants to retire well before 58 years.
According to the PPF calculator, what this investor can earn, if everything goes to plan, is a magical amount of Rs 1,54,34,542!
Importantly, if the investor also increases his contributions to the maximum allowed of Rs 1.5 lakh per annum sometime during this journey, the returns will balloon even further. In effect, the investor is making his savings money pad up his nest egg for the future.
The final benefit we have left for the end. PPF is entirely tax free! You will get the added pleasure of denying the taxman any part of this money.
Note: The amounts mentioned here are estimates and the actual figures will be available in the PPF passbook.
For all those who want to make their money grow to build their wealth up substantially as well as safely, a PPF account should be eyed positively. Here, take a look at the PPF calculator and how it will make a contribution of Rs 8500 turn into a whopping Rs 1.5 crore. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
