Post Office PPF: An amazing Post Office program that allows you to invest Rs 5,000 per month and earn over Rs 26 lakh

Post Office PPF: An amazing Post Office program that allows you to invest Rs 5,000 per month and earn over Rs 26 lakh

Post Office PPF: An amazing Post Office program that allows you to invest Rs 5,000 per month and earn over Rs 26 lakh

The advantages of investing in PPF are outlined by banks and post offices themselves. It is a terrific instrument for investments as it offers good interest rates, tax-free investment opportunities, and entire ownership of the money received at maturity. The maturity term is 15 years.

If you're looking to start investing, want to earn a good interest rate, or want a risk-free investment, the Public Provident Fund (PPF) scheme is the best option. It is open to all Indian citizens, and the biggest advantage is that the benefits come with no strings attached. Banks and post offices themselves explain the benefits of investing in PPF, which include good interest rates, tax-free growth, and the ability to keep the money you earn after it matures. It's also a great tool for investors, as it can be extended beyond the 15-year period. If you choose to do so, however, the investment will grow rapidly, and you will witness your initial investment of Rs 5000 turn into over Rs 26 lakh.

When the investment matures, you have three options. It is crucial to comprehend these options: (1) take your money out of the account; (2) interest will still accrue even if you choose not to take out the money; and (3) you can extend the investment for an additional five years by making new investments. Let's look at how each of these options works.

1. Take out the whole amount upon maturity

Redraw the amount you deposited and interest on your PPF account upon maturity. If your account is closed, all funds will be transferred to your account. The amount you deposited and the interest you received upon maturity are fully tax free. In addition, you are eligible for income tax exemption on investments up to Rs 1.5 lakh annually. You won't be required to pay taxes on any funds you deposited over the course of the account.

2. Extend your five-year PPF investment

The second option is to increase investment after maturity. The scheme allows you to extend your account for a maximum of five years; however, in order to do so, you must notify the bank or post office one year in advance of the PPF account's maturity. The benefit of this is that you are not subject to the premature withdrawal rule during this time, so you can withdraw your money at any time.

3. A scheme that, even after maturity, doesn't increase investment

In the third option for PPF accounts, in the event that you do not select both of the aforementioned options, the account will continue to function even after maturity. No additional funds will be required, and maturity will be automatically extended to a period of five years. The primary benefit of this option is that interest will be paid on the deposited amount for the duration of this period, and if you choose to extend it again after the initial five years, you will receive interest on the entire amount.

Where may a PPF account be opened?

In addition to opening an account at any government or private bank, you can also open an account at any post office branch in your city. If you would like to open an account for a minor, you can do so, but the parent's share will remain on the account until the minor turns eighteen. As per the guidelines set forth by the Finance Ministry, a Hindu Undivided Family (HUF) is not permitted to open a PPF account.

How is Rs 5000 going to be worth Rs 26.63 lakh?

Currently, the Public Provident Fund yields 7.1 percent interest. Interest is calculated annually, but decisions are made on a quarterly basis. The interest rates have not changed in a long time. Based on the assumption that investments made at the same rate for 15 or 20 years will result in the creation of a sizable corpus in varying amounts, the calculations are shown below.