PPF Calculator Increase your PPF account balance to over Rs 1 crore. here’s how
Increase your PPF account balance to over Rs 1 crore. here’s how
New Delhi: The Public Provident Fund (PPF) is a small, government-backed savings program that is extremely popular among risk-averse investors looking to invest in debt securities. PPF offers moderate returns and is packed with tax benefits, tax exemptions and capital security. Interest earned as well as returns are not subject to income tax. I
The interest rate offered on PPF is higher than most other investment products of similar duration that offer guaranteed returns. Investments in PPF can be made in a lump sum or in up to 12 installments. The minimum authorized investment is Rs 500 and the maximum is Rs 1.5 lakh for each financial year. The current interest rate is 7.1% per annum and the term of the PPF account is 15 years.
If invested correctly and consistently in PPF, one can become a crorepati at the time of redemption. All an investor needs to do is extend their PPF account after a 15-year maturity period. The PPF account falls under the EEE category where investment up to Rs 1.5 lakh per year is exempt from income tax. Apart from this, the interest rate of the PPF and the maturity amount of the PPF are also exempt from any type of outflow of income tax.
One can start investing in a PPF account at the age of 30 and continue to save in a PPF account for the next 30 years until retirement. Once the 15-year deadline has ended, they must submit an application in the prescribed format for extending their PPF account.
The PPF account can be extended in blocks of five years by submitting an application in the prescribed format to the bank or post office where its PPF account exists. You can extend a PPF account an infinite number of times.
Now, assuming an investor opens a PPF account at age 30 and starts investing Rs 10,000 per month, then after 15 years, assuming the current PPF interest rate of 7.1% for the entire investment period, the maturity amount would be Rs 31.55 lakh. Of this, Rs 18 lakh would be the deposit amount while Rs 13.55 lakh would be the interest earned.
Result of the PPF calculator:
Now if the PPF account holder extends their PPF three times – 15th, 20th and 25th year of opening the PPF account. Then, the PPF account holder can continue to save in the PPF account for 30 years. Assuming the current PPF interest rate of 7.1% for the entire investment period, the PPF calculator suggests that we will get Rs 1,19,85,164,31.
On this PPF maturity amount of Rs 1.1 crore, one will earn PPF interest of Rs 70,29,483 while one invests Rs 49,55,680 during this 30 year period.
Result of the PPF calculator:
Remember that the wealth acquired in the form of PPF interest and the PPF maturity amount will be exempt from income tax. So, this PPF account extension trick will not only help the investor to continue enjoying the benefits of section 80C, but at the same time, it will help them to accumulate more than Rs 1 crore.