The stock markets are soaring high after the recent crash and even the initial public offering space is hot. The investors are lining up to buy seemingly with no concern in the world. However, the common investor should take his eye off all that hectic stock market activity and focus on earning his money from something that is safer and yet, helps create a huge amount. We are talking about the Public Provident Fund (PPF).
This is a money-making tool that takes time, but delivers outstanding value to its investors. Plus, it provides something that virtually no such investment scheme does – total security and safety of the investors’ money.
There are other benefits too and among them is an important one – the investor does not have to keep a constant eye on what is happening to his PPF account. All that matters is that he lands up at the bank every month to make the deposit. PPF withdrawal too is a simple process at the time of maturity unlike some other investments schemes like the EPF.
Another safe bet that an investor can depend on are bank fixed deposits. However, one thing that needs to be kept in mind is that bank FDs are taxable while PPF is EEE – Exempt-Exempt-Exempt – at every stage..
To show the capabilities of the PPF in creating a massive retirement corpus for the investor, we will make a few assumptions here. The first one is that our PPF investor starts his investing journey early at the age of just 18. The sum can be small, just Rs 4000. The investment period can be a lengthy one at 42 years. In effect, the PPF investor will be investing Rs 4000 monthly over this tenure.
To the equation will be added the PPF interest rate of 7.1! This is pretty high and competes well with the bank FD interest rates, but at one time, this even used to be 12%! Yes, you read that right.
This equation is inserted into the PPF calculator and it provides and incredible answer. The PPF investor will earn as much as Rs 1,21,86,059! the man will turn into a crorepati at the age of 60, which is the perfect age for retirement!
In case the gentleman does not want to retire and keeps contributing for another 5 years, then he will get the princely sum of Rs 1,74,67,819!
One more thing – PPF has a maturity period, as well as a lockin period, of 15 years. Thereafter, the investor needs to extend the same in batches of 5 years. These extensions can continue indefinitely.
Note: The sums mentioned here are estimations and the actual amount will be mentioned in the investors’ PPF passbook.
PPF interest rate: With just Rs 4000, you can get Rs 1 crore, PPF calculator shows how to go about turning a small amount into a hefty nest egg. Check Public Provident Fund benefits. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
