Public Provident Fund (PPF) is a retirement focused long-term investment account that allows small investors to accumulate a corpus for retirement by taking advantage of attractive returns, long-term compounding and tax benefits.

The PPF is a great investment and savings option for anyone looking to make safe, long-term investments that offer assured returns. The PPF is backed by the Indian government, making it ideal for investors with a low-risk appetite.

To help you plan your PPF investments better, you may use a PPF calculator. You can calculate your PPF investments the same way you’d calculate FD interest rates and returns. Input all relevant details such as monthly/yearly investment amount and investment tenor (minimum of 15 years), the rate of return will remain constant at 7.1%. Once you’ve entered all relevant information, you will receive an estimate of the returns and maturity amount. You may tweak the inputs on your PPF calculator to plan and budget your PPF savings and investments efficiently.

How Much You Need to Invest to Earn More Than a Crore

The PPF is a great option for anyone looking to make low-risk investments that offer guaranteed returns along with tax benefits. It is also an extremely accessible tool to help small investors accumulate a retirement corpus.

Currently, the PPF offers a return of 7.1% that’s compounded annually. You can make investments in lump sum or in instalments in multiples of ₹50, depending on your financial situation. You can begin investing in PPF with amounts as low as ₹500 and go up to ₹1.5 Lakhs per annum.

The PPF has a lock-in period of 15 years. Upon completion of 15 years, you can choose to extend it in 5-year blocks as per your wish. There are no limitations on the number of extensions you can make.

Accumulating a corpus of ₹1 Crore while investing in a PPF account is quite possible, if you keep at it and invest diligently. In order to accomplish this goal, you would have to invest for around 25 years, contributing the maximum investment amount permissible - ₹12,500 per month or ₹1.5 Lakhs per annum. Assuming that the rate of return continues to stay constant at 7.1%, you’d have accrued ₹43 Lakhs at maturity (15 years).

Assuming that you’re keen on maximising your retirement corpus rather than cashing in and you extend your PPF investment for 5 more years while continuing to contribute your monthly PPF investment of ₹12,500, you’d have accumulated ₹73 Lakhs at the 20-year mark. If you extend your PPF investment tenor for another 5 years and continue to make your monthly investment of ₹12,500, you’d have accumulated more than ₹1 Crore by the end of 25 years.

Here’s a table to help you understand how you can earn more than ₹1 Crore with your PPF investment:

This is a great illustration as to how effective simple, risk-free long-term investments are when it comes to investing and long-term wealth building. 

Tax Benefits with the PPF

PPF is one of the very few investment options that enjoy an ‘Exempt-Exempt-Exempt’ (EEE) tax status. The EEE status is often granted to long-term investments that often come with a lock-in period to incentivise long-term investments for small investors.

The first exemption means that your investment is eligible for a tax deduction, meaning a part of your income that is equal to the investment amount will not be taxable. The second exemption refers to the fact that any returns or interest earned as the investment grows during the accumulation period will also be exempt from taxation. The third exemption implies that the income you earn at the time of withdrawal will also be tax-free.

This means that neither the maturity amount, nor any interest earned through the PPF will not be taxed. As per the Section 80C of the Income Tax Act, 1961, any investment made towards PPF investment as well as any PPF amount withdrawn at maturity are tax-free.

Closing Statement

The PPF is one of the safest and most secure ways to save and invest money for long-term investment goals, specifically retirement. The PPF is a great way to accumulate a retirement corpus as it not only offers assured and attractive returns but is also completely tax-free at maturity. A PPF calculator helps you calculate your return just like an FD calculator lets you calculate FD interest as per rates that prevail.

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