Why Should You Invest in a PPF? Is It a Good Idea?

When you plan to save for your retirement, it is certainly one of the most crucial financial goals. As your capability to earn money will reduce after your retirement, you should definitely make prudent and sensible choices during your earning times to save sufficient money that can help you to relish a tension free life after your retirement. 

Retirement planning is one of the most critical aspects of getting your finances right in proper order to make utmost of your days after retirement.  Here, ppf or public provident fund is one of the most well-known long-term investments that helps you to save for your retirement.  If you don’t much about how it works and how much you may gain on each investment then you can use ppf calculator to make things smoother and more understandable for you. Remember this ppf offers you high-interest rates and is packed with tax benefits, tax-exemption and even security to capital. The interest earned and even the returns will not be taxable under the income tax. If you are still not sure about this move then walk through the following reasons why you should consider it.

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Enjoy high interest rates

Interest rates have fallen massively in the last few years and it is extremely challenging to find investments that offer inflation-beating decent returns. Ppf is one of the oldest schemes and even the interest rate on the ppf is presently 7.1 percent. Once you compare this rate with the interest rates on any bank fds such as state bank of india or huger sized private sector players such as icici bank and hdfc bank, you may realize that ppf actually gets you higher interest rates.

Get tax-free interest income

Now, tax is a big thing and everyone fears it. But you know, with ppf, you get exempt-exempt-exempt (eee) tax benefit and it simply means that interest earned on the public provident fund is going to be tax-free. In case you consider bank deposits, the overall earned interest from them is going to be taxable. So, in case you are in the highest tax bracket, you incline to pay a lot of tax. Rather , your post-tax yields is going to fall dramatically in different instruments and that makes the ppf a wonderful investment choice if you compare it to other options in the same category.

You can be a crore pati by your retirement

Yes, the utmost amount of investment via the ppf is Rs 1.5 lakh in a single financial year. Whereas the minimum investment is Rs 500 every single year. Thinking that the present ppf interest of 7.1% stays constant across the investment period, you can accumulate Rs 1 crore in just 28 years by simply investing Rs 10,000 at the start of every month. 

What you need to understand also is that out of the Rs 1.054 crore that you get to gather via ppf in twenty eight years, nearly seventy two percent will come as interest and you invest only 33.60 lakh  rupees over the  time of twenty eight years.  Also remember that the maturity of ppf account takes place in fifteen years but you can extend the maturity by a single block of five years for numerous times by doing the needful formalities.


So, you can check out for yourself the calculations of your investments by using  ppf calculator. You can even get mor information about this and more at platforms line 5paisa. After all, an informed person is a financially sound one!