If you want to build a large fund by staying away from risk, then PPF is the perfect option for you. By investing just Rs 1 lakh every year, you can not only save tax but also lay a strong financial foundation for future big expenses.
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You can get a huge fund at the age of 40
Suppose you are 25 years old now and you want to fulfill a big dream at the age of 40, like saving money for your children’s education or buying your own house. In such a situation, if you save just Rs 1 lakh every year and invest it in Public Provident Fund (PPF), then in a few years you can create a fund of about Rs 27 lakh.
How to create a fund of Rs 27 lakh?
The maturity period of PPF scheme is 15 years. If you deposit Rs 1 lakh every year, then in 15 years your total investment will be Rs 15 lakh. The interest you will get on this, which is 7.1 percent per annum, will be around Rs 12,12,139. That means you will have a total fund of Rs 27,12,139. The most important thing in this is that this entire amount will be tax free.
No risk, no fear of losing money
PPF scheme is run by the government, so there is no risk in it. Your money is completely safe and the interest received on it is also fixed. There is no risk of fluctuations in it like the stock market. This is the reason why this scheme is very popular among working people and middle class families.
Great tax exemption too
Investing in PPF also gives you tax relief. Under Section 80C of the Income Tax Act, you get a deduction of up to Rs 1.5 lakh annually. Also, the entire amount and interest received on maturity is also tax free. It has been placed in the EEE category, that is, there is no tax on investment, interest and withdrawal.
How to open PPF account?
Opening a PPF account is very easy. You can open it through any government or private bank, post office or online platform. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be invested in it in a year.
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