Post Office Scheme: Post Office Scheme is very much liked among the middle class. This is because here your money is completely safe with high returns. By investing here, you can make a corpus of lakhs of rupees in the long term.
Daily investment of Rs 167
For the maturity of Rs 16 lakhs, you have to invest Rs 167 per day i.e. Rs 5000 per month. If you deposit Rs 5,000 in your PPF account every month, then on the maturity of 15 years, you will be the owner of more than Rs 16 lakh.
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The extended time period in blocks of 5 – 5 years
Actually, the lock-in period of the PPF account is 15 years. If you want to operate it for more than 15 years then you have to fill out a form for it. On completion of the maturity period of 15 years, you can continue with the PPF account with fresh contributions in blocks of 5-5 years. Here we are telling you the account of 25 years.
Benefits of compounding
If you continue to contribute 5 thousand rupees per month (Rs 167 per day) from 16th year to 25th year, then on the maturity of 25th year you will get an amount of 41 lakhs. In this scheme with guaranteed returns, investors get tremendous benefits of compounding.
How did 41 lakhs become?
You invest Rs 5,000 every month in PPF. Accordingly, you have invested Rs 60,000 annually. On increasing the account in a block of 5-5 years, on maturity in 25 years, you will get Rs 41.23 lakh. In this, you will have an investment of Rs 15 lakh, while there will be a profit of Rs 26.23 lakh.
Interest rates change on a quarterly basis
It will be easy for you to create a corpus of 41 lakhs. But account holders can apply for an extension in a block of 5 – 5 years.
This amount is tax-free
Tax exemption is available in PPF under section 80C of the Income Tax Act. Thus, investment in PPF comes under the ‘EEE’ category. A loan facility is also available against the PPF account. One can apply for the loan after the completion of one year from the end of the year in which the PPF account is opened and before the completion of 5 years.
