Everyone desires financial security after retirement. Fortunately, this doesn’t require a significant investment. If you start depositing ₹1.5 lakh annually into the Public Provident Fund (PPF) from the age of 30, you can achieve this.
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Everyone desires financial security after retirement. Fortunately, this doesn’t require a significant investment. If you start depositing ₹1.5 lakh annually into the Public Provident Fund (PPF) from the age of 30, you can build a corpus of approximately ₹1.54 crore by the age of 60. PPF is a government-run savings scheme that offers good interest rates and tax benefits.
How much return will you get?
If a person starts investing at age 30 and deposits ₹1.5 lakh every year until age 60, their total investment will be ₹4.5 million. At the current interest rate of 7.1%, this amount could grow to approximately ₹1.54 crore. Of this, approximately ₹1.09 crore would come from interest alone, while you would have invested only ₹4.5 million from your own pocket.
How is a fund worth crores created in PPF?
The biggest reason for this is compounding. You earn interest not only on your investment but also on the interest earned earlier. The longer you keep your money in PPF , the faster your fund will grow. Therefore, starting early is always considered beneficial.
The account is not closed after 15 years.
Many people think that the PPF account closes after the 15-year term is up. However, this is not true. After 15 years, you can extend the account in 5-year blocks and continue investing. This feature allows investments started at age 30 to last until age 60.
How to get more benefit from interest?
PPF interest is calculated on the minimum balance in the account after the 5th of each month. Therefore, experts recommend making annual deposits in early April, preferably before April 5th. This ensures interest accrual throughout the year and improves returns.
Tax relief too
The most special thing about PPF is that the investment, the interest earned and the entire amount received on maturity are all tax-free.
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