PPF stands for Public Provident Fund. This scheme was introduced by the Indian government in the year 1968 with the thought of making small investments over a period of time and reaping reasonable returns with additional benefits like tax savings. PPF is a great tool for retirement planning. It is a safe place to make investments as the scheme is backed by the Indian government with minimal risk involved and guaranteed returns. Also, the initial money investment, interest earned, and the maturity amount are all tax-free. Calculating PPF is easy as well. There are online PPF calculators available to get an estimate of returns on investment.
Procedure to Open a PPF Account
All banks and financial institutions have the facility to open a PPF account. You can also open a PPF account at the post office. All you need to do is submit all your KYC documents like Pan Card, Aadhar Card, or other identity and address proof to the bank or post office. The amount invested in a PPF account is locked for 15 years. However, there is a provision to withdraw from the account after completing 6 years. The depositor can withdraw the amount once a year. You can invest from Rs 500 to Rs 1,50,000 a month in your PPF account. You can also choose to make monthly payments or deposit a lump sum amount. Investing in PPF is a great option for those planning to have a great retirement life.
Do you know how much to invest in a PPF account?
Most individuals invest in a PPF account to save for retirement time and to save tax. By calculating PPF, you can know how much money you need to invest to reduce tax and get an estimate of how much return can be earned after the lock period. You can invest from Rs 500 to Rs 1,50,000 a month in your PPF account. The interest rate offered on a PPF account is 7.1% annually. Though the returns are guaranteed, it is still not advised to invest all your money in a PPF account. Use other investment schemes to get better returns.
Why should you invest in PPF?
For risk-averse people, investing in PPF is a safe bet. Undoubtedly, PPF is a low-risk investment with great assured returns. People who are looking for higher returns and have a strong heart to deal with risk can look for other investment schemes like stocks or mutual bonds. Also, PPF is considered a great tool to save tax and offers flexibility on deposits. If early investments are made in PPF, depositors also have an option to extend the lock period for 5 years after 15 years.
The Benefits of Investing in PPF
Making timely investments for a good tenure ensures a happy and hassle-free retirement life. The higher the investment tenure, the better the returns are received after maturity. Every investment scheme has its own benefits. Since we are talking about PPF accounts here, let’s learn about the various benefits that you can receive by investing in PPF.
- A PPF account offers a higher rate of interest than the regular savings account and fixed deposit as well. The interest rate provided on a PPF account is 7% to 8%.
- Saving tax is a huge factor for investing in PPF. The investment amount, interest earned, and maturity amount are all exempted from tax deductions. This makes the entire investment tax free.
- It is a safe investment as it is backed by the government of India, making it safer than other high-risk investments.
- The investor is allowed to take a loan on PPF after making regular deposits for at least 3 years continuously. Also, after completing 6 years, i.e., in the 7th year, the investor can also start withdrawing from the PPF account.
- In the case of a disabled child or a minor, PPF allows their guardians to open a PPF account on their behalf. This will help in securing their future.
Determine your returns with PPF calculator
Like other online calculators, the PPF calculator is also a great tool that is simple and easy to use. By calculating PPF via a PPF calculator, you can get an estimate of interest earned and the total maturity value of the principal amount. Knowing about your returns on investment prior to making an investment helps in making decisions easier. This way, they can make an appropriate decision and see if the investment scheme is fulfilling their financial goals. Also, investing in PPF gives an opportunity to withdraw money or take a loan against the invested amount in case of emergencies.
So, should you invest in PPF? The advantages offered by the PPF account are great. It can be easily opened online, and you can also visit your bank branch to open a PPF account.
