A Public Provident Fund (PPF) account is considered to be one of the safest investments. It is also termed as one of the best for long-term savings, mostly due to its combination of safety, returns, and tax-saving options. It was first offered to the general public in 1968 by the Finance Ministry’s National Savings Institute, and soon it emerged as a powerful tool for investors. PPF is a retirement-focused plan that enables the creation of a corpus with a regular deposit (according to the chosen plan) in small amounts. It is tax-free, and it offers a guaranteed return of 7.1%, which makes it more suitable for investors. The government guarantees your investment and sets the interest rate every quarter, making it reliable.
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The PPF account can be started by investing a minimum amount of Rs 500 to a maximum amount of Rs 1,50,000 per year. Usually, the PPF account matures after 15 years, but it can be extended for five years even after maturity. If you have just started your career at the age of 25 and have managed to deposit around Rs 1.5 lakh in your account every year on April 1, then by next year, March 31, around Rs 10,650 will be deposited in your account with an interest rate of 7.1%. By the start of the next financial year (April 1), your account will have approximately Rs 1,60,650.
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If you deposit Rs 1.5 lakh on the second financial account, your PPF account will have an amount of Rs 3,10,650. If you keep depositing Rs 1.5 lakh every year, the amount after 15 years will be around Rs 40,68,209. The principal amount will be Rs 22,50,000, and the interest received will be Rs 18,18,209.
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If you leave the financial corpus for another 20 years, it will grow to Rs 1 crore. A monthly investment of Rs 9165 can make you a millionaire in 30 years, within which the first 15 years will include regular investment; after that, you are not required to invest anything but keep the amount in your PPF account for another 15 years. With continuous investment every year, when the account matures and the account holder is 60 years old, the total amount received will be approximately Rs 2,26,978,57.
