Public Provident Fund (PPF) is the most popular savings scheme. In this safe investment scheme, excellent interest is available, as well as tax savings are also available. For this reason, now the number of people investing in PPF is increasing.
If properly invested in PPF, then at the time of retirement you will have tax free fund of crores of rupees in your hands. Compound interest is available on the money in PPF. This feature of compounding increases money. At present, the government is paying interest at the rate of 7.1 percent on the amount deposited in the PPF account.
Any Indian can invest in PPF. PPF account can be opened in post office or any bank branch. A minimum of Rs 500 and a maximum of Rs 1,50,000 can be deposited in the PPF account per year. The interest on this amount is added to the account on the last day of every financial year. This is the scheme of EEE category. This means that there is no tax on the amount deposited every year, the interest earned on this amount every year and the entire amount received at the time of maturity is tax free.
How PPF will make you a millionaire
By starting early investing in PPF and maintaining the investment till the age of 60, a person can create a corpus of crores of rupees for retirement. PPF account matures in 15 years. But, the term of the account can be extended for five years even after maturity. If a person opens a PPF account at the age of 25 and deposits Rs 1.5 lakh in his account on April 1 every year, then Rs 10,650 will be deposited as interest in the PPF account on March 31 next year at an interest rate of 7.1 per cent. Will be
This will make the account balance Rs.1,60,650 on the first day of the next financial year starting on 1st April. This amount will increase to Rs 3,10,650 if Rs 1.5 lakh deposited in the second financial year of account opening is added.
In the second year, the account holder will get Rs 22,056 interest on the amount of Rs 3,10,650. Similarly, if the investor keeps depositing 1.5 lakh in the account every year on April 1, then after completion of 15 years of maturity, the PPF account will be Rs 40,68,209. Out of this, Rs 22,50,000 will be the principal amount and Rs 18,18,209 will be of interest.
Maturity will have to be extended for 5-5 years
PPF account can be extended for five years by applying before maturity. An investor investing from the age of 25 years will become 40 years old on maturity of the account. After this, by extending the PPF account for five years and maintaining the same annual investment routine as before, then by the time the investor turns 45, the total amount deposited in the account will be Rs 66,58,288.
Now again he has to extend the account for five years and continue investing as before. Next time at the time of maturity, i.e. at the age of 50 years of the account holder, the total amount in the PPF account will be Rs 1,03,08,014. Once again, on increasing the account for five years, the account holder will be able to invest Rs 1.5 lakh every year till he is 55 years old. On maturity of five years, there would have been Rs 1,54,50,910 in the PPF account.
The fund will be above 2 crores
this time one has to get the last extension of PPF account and after making continuous investment every year when the PPF account matures i.e. when the account holder will be 60 years old then the total accumulated amount in his account will be 2,26,97,857 Will be Rs. In this, the total investment of the account holder will be Rs 52,50,000, the amount of interest received on this investment will be Rs 1,74,47,857.
