Kolkata: Public Provident Fund, or PPF, is one of the investment instruments that were launched in the heydays of the controlled economy (in 1968) and has enjoyed immense popularity. Though a gradual reduction in the interest rate – from a peak of 12% to 7.1% now – has taken off some of the glitter from this instrument, a vast number of Indians still swear by it. In fact, many investment strategists still say that one should put a part of the portfolio in fixed income instruments such as PPF, since it allows long-term compounding of investments, which is one of the most potent forces in the investment world.
Due to its long-term benefits, the PPF has been considered as a retirement-oriented government scheme and an excellent tax saving instruments available to Indians. The advantage of PPF (over EPF or Employees’ Provident Fund say) is attributable to the fact that one does not need to have a job – unlike in EPF – to invest the benefits of PPF. Anyone can invest in a PPF account and invest a maximum amount of Rs 1.5 lakh in it in one financial year. In that sense, PPF has a wider appeal that EPF. PPF investments can be used as an effective retirement fund.
How much will I get after 15 years in PPF
An online PPF Calculator will tell you the projections. If you invest the maximum amount of Rs 1.5 lakh a year for 15 years in PPF, the account will accumulate an amount to Rs 40,68,209. Of this kitty, Rs 22,50,000 is what you have invested from your pocket and Rs 18,18,209 is the interest is generated. PPF has a significant flexibility which allows an investor to keep on extending the tenure of the account beyond the initial 15-year-period in multiples of 5 years. If the investor is disciplined in approach, PPF can also create crorepatis.
What is PPF and how it works
The rate of interest that is applicable in PPF is set by the government. Therefore, returns are immune from the market fluctuations. Every year, it multiplies the investment. One important thing to remember is that you must invest in a PPF account by the 5th day of any month, irrespective of whether you invest in it once a month or once a quarter or once a year. The reason, the interest is applied on the outstanding balance on the 5th day of every month.
Another remarkable feature of the PPF is that you can open a PPF account in the name of your kid and deposit money there. It will allow creation of a big amount over a number of years and you can also derive income tax benefits from that investment.
The attraction of PPF, or Public Provident Fund, are threefold. It offers Income Tax relief on the principal, interest as well as entire maturity amount besides an interest rate that now stands at 7.1%. Moreover, it builds capital in the very long term with the highest possible degree of safety. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
