The interest rate on the Public Provident Fund (PPF) is 7.1 percent compounded annually.
New Delhi: Investing in the post office can be a safe and successful choice. Savings plans with maturities ranging from one to fifteen years are available at the post office. If you have a lengthy investment perspective, you should consider investing in a Public Provident Fund (PPF). This scheme has a maturity period of 15 years, and the interest rate is increasing as compared to FD or RD.
15 years Maturity
The interest rate on the Public Provident Fund (PPF) is 7.1 percent compounded annually. This scheme has a 15-year maturity period, but it can be extended for additional 5 to 5 years after that. If you do not require the fund after 15 years, you can carry it forward. This will increase the benefit of compounding. The maximum amount that can be placed in this scheme each year is Rs. 1.50 lakh. Instead of depositing Rs 1.50 lakh in a year, you can alternatively deposit Rs 12,500 per month. You can also benefit from a tax exemption under Section 80C of the Income Tax Act if you have a PPF account. The interest and maturity income earned in this account is tax-free as well.
PPF calculator: 18 lakh interest on 22.5 lakh deposits
Maturity: 15 years
Monthly investment: Rs 12,500 in
1 year Investment: Rs 1.50 lakh
Total investment in 15 years: Rs 22.50 lakh per
annum Interest rate: 7.1 percent
Maturity amount: Rs 40.70 lakh
Interest benefit: Rs 18.20 lakh
The benefit of a PPF is that it can be extended for another 5 years after maturity. Based on current interest rates, if you wish to generate a corpus of one crore from this scheme, it will need to be extended twice for a total of five years after maturity.
