PPF: Market-linked investment options may give one high returns but these returns can turn negative if the share market is down or the economy is going through a recession. In such a situation a middle-income person seeks investment options which are risk free and where they can get guaranteed returns and fixed income.
For such people, one successful Post Office scheme is Public Provident Fund (PPF).
Public Provident Fund (PPF)
Any Indian citizen can invest in this scheme.
At present, interest is being given in this scheme at the rate of 7.1 per cent.
You can open PPF account anywhere in Post Office or bank.
In the PPF scheme, you get the benefit of compounding.
If you want, you can add so much money through this scheme that you can fulfill many of your needs- right from marriage of children to buying a house. Know how-
PPF: Know how Rs 66,58,288 will be earned
According to the rules, investment in PPF scheme can be started with Rs 500, while you can deposit a maximum of Rs 1.5 lakh every year.
This scheme is for 15 years, but you can extend it in blocks of 5 years.
If you invest Rs 1.5 lakh every year in PPF continuously for 15 years, your total investment will be Rs 22,50,000, but with a 7.1 per cent interest, you will get a total return of Rs 40,68,209.
If you get your investment extended once in a block of 5 years and continue the same investment for the next 5 years, you will invest a total of Rs 30,00,000 in 20 years.
With a 7.1 per cent interest rate, you will get Rs 36,58,288 as interest and a total of Rs 66,58,288 on maturity.
With this amount, you can easily fulfill the needs of children’s higher studies, marriage and housing.
If you start investing in PPF even at the age of 25, you will accumulate a good level of wealth in just 15 years.
PPF extension rules
Only citizens living in India can get PPF extension.
Indian citizens who have taken citizenship of any other country are not allowed to open a PPF account or if they already have an account, then they are not allowed to extend it.
For PPF extension, you will have to submit an application to the bank or Post Office where you have an account.
You will have to give this application before the completion of 1 year from the date of maturity.
If the period of PPF account is extended for 5 years on your application, you will have to deposit at least Rs 500 every year.
If you do not deposit this minimum amount, your account will be closed.
To restart it, you will have to pay a penalty of Rs 50 per year.
