Though categorised as a small savings instrument, the Public Provident Fund, popular as PPF, is no small deal. Small savings instruments are managed and promoted by the Union government to encourage the common people to save regularly, irrespective of their age and income level. They offer sovereign guarantee and tax benefits.
Launched 56 years ago, the PPF has earned the confidence of the average Indian citizen as a powerful long-term tool that can build a significant corpus for financial security in old age.
Let’s find out with the PPF calculator that is available online. The current rate of interest that PPF offers is 7.1% (annually). We are assuming that this rate of interest holds throughout the tenure.
PPF calculator: Corpus with Rs 5k/month
If someone puts Rs 5,000 every month for 25 years into his/her PPF account, the amount that will be accumulated will be Rs 41,23,205 (Rs 41.23 lakh). If the period is extended to 30 years, Rs 61,80,362 (Rs 61.80 lakh) will be generated.
Corpus with Rs 8k/month
Let’s raise the monthly investment to Rs 8,000. If one has the rigour and discipline to continue it for 25 years, a pool of Rs 65,97,129 can be created. But for investment up to 30 years, the pool can rise to Rs 98,88,582.
Corpus with Rs 10k/month
If a person invests Rs 10,000 a month and continues it for 25 years, an amount of Rs 82,46,411 (Rs 82.46 lakh) will be generated. Extend it by 5 more years and the amount zooms to 123,60,728 (Rs 1.23 crore).
PPF benefits
One of the significant features of the PPF is that anyone can invest in it. Even parents/legal guardians can open a PPF account in the name of a minor and start saving for the future of the child. The accumulated funds can either be used for higher education, marriage or starting a small business.
Or, if anyone so desires, one can continue the account for more than 50-55 years – way beyond the lock-in period of 15 years – to get a huge sum when the minor securely turns 60. One can open a PPF account at any post office or designated banks such as SBI.
The Public Provident Fund is a tool for very long-term financial planning. It is a completely secure and tax-efficient tool. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
