PPF is well-liked by many for minor savings plans. Millions of people are making PPF investments with their children’s futures in mind. However, some investors do so without fully understanding the situation. Investing in it has the benefit of tax-free money received at maturity. PPF was established in 1968 by the National Savings Institute to build a large fund out of smaller savings. You can accumulate a Rs. 1 crore retirement fund if you make consistent iPPF investments for 25 years. A minimum of Rs. 500 and a maximum of Rs. 1.5 lakh can be invested in PPF.
Possibility of 25-year PPF continuation
A PPF account’s maturity duration is 15 years. However, following this you can extend it in blocks of 5 years each. If you keep investing a little money in your PPF account every year for 15 years, then after 15 years you will have a good fund. After 15 years, you can close your PPF account or you can continue it for 10 years by investing 5 years each. One advantage of investing in PPF is that it offers three different kinds of exemptions. Under section 80C of income tax, you are not required to pay any taxes on the money you invest here, the interest you earn on it, or the return of your money. Aside from this, PPF is regarded as a secure investment because it is a government-backed program. This carries no danger.
How to establish a Rs 1 crore fund
PPF interest is paid annually at the end of the fiscal year. To receive the most possible benefit, you should deposit either Rs. 1,50,000 or Rs. 12,500 per month starting on April 1st of the current year. You will generate curiosity for the entire year. If you deposited Rs 1.5 lakh at the beginning of the year, then according to the current interest rate, interest of Rs 10,650 will be added to your PPF account on 31st March next year. That means next year you will have Rs 1,60,650 in your account.
18.18 lakhs in interest over 15 years
The total will be 3,10,650 rupees if you add the 1,50,000 rupees you plan to deposit for the following year to the 1,60,650 rupees already there. You will receive interest on 3,10,650 rupees, or 22,056 rupees, at the end of this year instead of 1,50,000 rupees. If you continue to deposit one lakh rupees on April 1st each year into your PPF account, after fifteen years you will have deposited twenty-two lakh rupees and will receive forty-six lakh rupees. The only interest in this will be 18.18 lakh rupees. If, after 15 years, you do not liquidate the PPF account and extend it for another five years, then your investment of Rs 30 lakh will increase to Rs 66.58 lakh. Out of this, Rs 36.58 lakh will be only interest. If you extend it again for five years (a total of 25 years), then your investment will become Rs 37.50 lakh and the interest will be Rs 65.58 lakh. In this way, in total, you will get Rs 1.03 crore.
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