Why PPF is a Great Investment?

If you are a conservative investor who always loves investing in fixed deposits, then PPF may be a great choice. Public Provident Fund or the PPF is a small saving scheme in India. PPF offers 7.9% interest rate for the October to December quarter. PPF interest rates are revised each quarter.

So Why is PPF a Great Investment?

PPF currently offers interest rate of 7.9% which is much higher than 6.5%-7% a year offered by fixed deposits. What makes PPF really great are the tax benefits. PPF enjoys the EEE exemption or falls under the Exempt, Exempt, Exempt regime. The investment in PPF enjoys the Section 80C deduction up to Rs 1.5 Lakh a year while the PPF interest and amount withdrawn at maturity are tax free. High interest coupled with tax benefits makes PPF an excellent investment.

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Why PPF is a Great Investment?

10 Important Things for PPF

• PPF can be opened with a minimum subscription of Rs 100. You can deposit a minimum amount of Rs 500 and a maximum amount of Rs 1.5 Lakh a year.
• PPF has a 15 year maturity period. This is basically a 15 year lock-in period. You can open another PPF account after expiry.
• You have the option of extending PPF account after tenure for one or more blocks of 5 years.
• You can take loan against PPF. You can apply for the loan from the 3^rd to the 6^th financial year after opening the PPF account. The loan can be taken on 25% of funds in the PPF account. If the loan against PPF is taken on minor’s behalf, the guardian would make a declaration that the money would be used only for the welfare/benefit of the minor.
• PPF is fully guaranteed by the Central Government which makes it a risk-free investment.
• A parent or guardian can open PPF account in a child’s name. PPF account cannot be opened in joint names.
• If you/parent make contributions to minor’s PPF account, you can claim tax benefit under Section 80C of the income tax act.
• When minor child turns 18, you must submit an application to change status from minor to major. This must be attested by the guardian and subsequently operation of the PPF account would be handled by the major (child who turns a major).
• NRIs cannot open PPF account. They can continue pre-existing PPF accounts; opened when they were Indian residents until maturity period. You/NRI cannot make fresh contributions to PPF account.
• Interest on PPF account is calculated based on the minimum balance between 5^th and the end of the month. If you want to maximize PPF interest, make contribution or lump sum before the 5^th of each month. Partial withdrawals from PPF are tax-free.

See Also: PPF Account Rules

PPF Calculator:

What is PPF Calculator? 

The PPF calculator helps calculate the returns got through PPF investment. With online PPF calculator, you can easily calculate yearwise PPF returns. All you must do is enter the tenure, deposit frequency, investment amount and PPF interest rate.

See Also: Everything You Need To Know On Public Provident Fund

Let’s say you invest Rs 1.5 Lakhs each year for a period of 15 years. We assume PPF interest rate of 7.9%. How much will PPF investment grow in 15 years?

Year	Opening Balance (Rs)	Amount Deposited (Rs)	Interest (Rs)	Closing Balance (Rs)
1	0	150000	11850	161850
2	161850	150000	24636.15	336486.15
3	336486.15	150000	38432.40585	524918.5559
4	524918.5559	150000	53318.56591	728237.1218
5	728237.1218	150000	69380.73262	947617.8544
6	947617.8544	150000	86711.8105	1184329.665
7	1184329.665	150000	105412.0435	1439741.708
8	1439741.708	150000	125589.595	1715331.303
9	1715331.303	150000	147361.173	2012692.476
10	2012692.476	150000	170852.7056	2333545.182
11	2333545.182	150000	196200.0694	2679745.251
12	2679745.251	150000	223549.8749	3053295.126
13	3053295.126	150000	253060.315	3456355.441
14	3456355.441	150000	284902.0799	3891257.521
15	3891257.521	150000	319259.3442	4360516.865

Take a look at the chart. You get nearly Rs 44 Lakhs after 15 years.

How to use PPF Calculator?

• You simply enter the PPF tenure.
• Deposit Frequency: This may be monthly, quarterly, half yearly or annual.
• Deposit Amount: You enter the deposit amount as per deposit frequency.
• PPF interest rates: You enter the PPF interest rates.

See Also: How To Open PPF Account Online?

Press calculate and get PPF maturity amount and PPF interest earned.

PPF Interest Rates:

Period	Rate
July – September, 2019	7.90%
April –June, 2019	8%
January –March, 2019	8%
October-December, 2018	8%
July-September, 2018	7.60%
April-June, 2018	7.60%
January-March, 2018	7.60%
October–December, 2017	7.80%
July–September, 2017	7.80%
April–June, 2017	7.90%
January–March , 2017	8.00%
October–December, 2016	8.10%
July–September, 2016	8.10%
April–June, 2016	8.10%
April 2015– March 2016	8.70%
April 2014 – March 2015	8.70%
April 2013 – March 2014	8.70%
April 2012 – March 2013	8.80%
December 2011 – March 2012	8.60%
April 2011 – December 2011	8.00%
April 2010 – March 2011	8.00%
April 2009 – March 2010	8.00%
April 2008 – March 2009	8.00%

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