How PPF (Public Provident Fund) Can Get You Big Returns. Read Here

Public Provident Fund (PPF) is a retirement-focused investment plan that enables the creation of a corpus with regular deposits in small amounts.

Investments in PPF are tax-free, so you can add to your savings every year while creating a corpus fund which could go over Rs.2 crores, depending on the contribution.

PPF offers a guaranteed return of 7.1 per cent annum, which makes it even more suitable for investors with low risk appetite. 

Returns earned on PPF investment are tax-free as well.

Tax exemption of up to Rs.46,800 can be claimed every year by an individual for 35 years. It must be noted that the tax exemption of Rs.46,800 is available to taxpayers in the slab of 30 per cent income tax rates. For others, the exemption limit may vary depending on their tax slabs.

A PPF account can be opened at any post office or bank. 

Contributions to the scheme can be as low as Rs.500 and can go up to Rs.1.5 lakh in a financial year. The maturity period of the PPF account is 15 years. However, it can be further extended multiple times, in blocks of 5 years.

If you start investing in PPF at the age of 25, you can create a corpus retirement fund of Rs.2.26 crore by the time you reach the age of 60, provided you make the maximum contribution available under the scheme.

An investment of Rs 1.5 lakh in PPF will give you a return of Rs.10,650 at the end of the financial year. So, form the next year, your investment with the contribution for that year of Rs.1.5 lakh will earn you Rs.22,056 as a return.

If you continue investing in the same pattern, you will have Rs.40,68,209 at the end of the 15-year maturity period. This will include Rs.22.5 lakh investment and Rs.18,18,209 returns earned.

If you started investing at 25, you are likely to have Rs.40.68 lakh in your PPF account by the time you are 40.

Now, you can extend PPF maturity by five years and continue investing in the same pattern. By the end of the first extension and the age of 45 years, you will have Rs.66,58,288 in your account. Of this, Rs.30 lakh is your investment and Rs.36,58,288 is your earned return.

With three more such extensions and by the time you reach the age of 60, you could have Rs.2,26,97,857 in your PPF account.

Use the PPF Calculator to calculate the maturity amount based on the amount invested.

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