PPF: Are you planning for your retirement, then the Public Provident Fund (PPF) can be a great option for you.
It not only keeps your savings safe but also gives you a good return. But do you know that you can also get a regular pension from PPF, Let’s know how.
A safe investment option
PPF is a long-term savings scheme backed by the government. In this, your money is completely safe and you get good interest. Apart from this, investment made in PPF is also eligible for tax exemption.
Plan pension through PPF
PPF can be used as a kind of pension scheme. If you invest for a long period, you will get a good amount on maturity. From the interest received on this amount, you can withdraw a fixed amount every year, which can meet your post-retirement needs.
Extend the tenure of the account: The tenure of a PPF account is 15 years, but you can extend it in blocks of 5 years each.
Regular withdrawal: You can withdraw money from a PPF account once a year without any penalty.
Growing corpus: Every year, interest is earned on the amount deposited in PPF, which increases your corpus.
Big amount on maturity: If you invest for a long time, you will get a big amount on maturity.
Regular income: After maturity, you can withdraw a fixed amount from the account every year, which will be equal to your pension.
How much to invest in PPF
A minimum of Rs 500 has to be deposited annually in PPF. However, there is no maximum investment limit. But keep in mind, to avail of tax exemption under Section 80C, you can invest a maximum of Rs 1.5 lakh annually.
PPF calculation
Suppose you invest Rs 1.5 lakh every year from the age of 30 and the interest rate is 7.1 percent. By the age of 60, you will have about Rs 1.54 crore deposited.
Now, after 60 years, you can withdraw the interest earned on this money, i.e. about Rs 10.97 lakh annually. This is equal to about Rs 91,417 per month. That is, you can get a pension of more than Rs 91 thousand every month.
Precautions before investing in PPF
PPF is a long-term scheme, so do not choose it if you need money quickly.
Diversify your portfolio with other investment options as well.
Keep investing regularly, so that you can get better returns.