Public Provident Fund

If you start investing Rs 1.5 lakh every year in Public Provident Fund (PPF) from the age of 25, then with the power of compounding, your money can grow rapidly in the long run. With regular investments and long tenure, a large tax-free fund can be created without taking much risk. But the question is, if you keep investing continuously, how much money can you accumulate by the age of 40, 50 and 60? Let us understand in simple language.

How much interest is available in PPF?

At present, PPF is getting 7.1% interest annually, which is compounded every year. The government reviews it every quarter. The lock-in period of PPF account is 15 years, but after maturity it can be extended in blocks of 5 years. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be invested in a financial year.

Investment for 25 to 60 years

If a person invests Rs 1.5 lakh in PPF every year from the age of 25 to 60 years, then at the current interest rate of 7.1%, a tax-free fund of about Rs 2.26 crore can be created.

How much will you get by the age of 40?

If you invest continuously for 15 years.

• Total investment: Rs 22.5 lakh
• Estimated interest: Rs 18.18 lakh
• Total Fund: Rs 40.68 lakh

How much will you make by the age of 50?

On continuing investment for 25 years.

• Total investment: Rs 37.5 lakh
• Estimated interest: Rs 65.58 lakh
• Total Fund: Rs 1.03 crore

How much will you get till the age of 60?

On investing for 35 years.

• Total investment: Rs 52.5 lakh
• Estimated interest: Rs 1.74 crore
• Total Fund: Rs 2.26 crore

Would it be right to invest in PPF now?

After the cut in interest rates by RBI and reduction in FD rates of banks, PPF's 7.1% return now looks more attractive than before. The special thing is that PPF interest is completely tax-free. For a person in the 30% tax bracket, the 7.1% tax-free return is considered to be almost equivalent to more than 10% return on a taxable FD.

Why is PPF considered a safe option?

PPF is not a volatile investment like the stock market. There is no market risk in this and money remains safe. While equity SIP can give higher returns in the long run, PPF gives stable and guaranteed returns. This is why it is considered a strong and safe option for retirement planning.

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