Thinking about diving into investing or looking for a way to make some solid returns from interest? Or maybe you want a risk-free investment option? If that’s the case, the Public Provident Fund (PPF) scheme is a fantastic choice. It’s open to all Indian citizens, and the perks of PPF are highly sought after. Banks and post offices often highlight the advantages of investing in PPF, such as attractive interest rates, tax-free investments, and the fact that the money you receive at maturity is entirely yours. It’s a great investment tool with a maturity period of 15 years, but you can extend your investment beyond that if you wish. If you do extend, your returns will keep coming in.
When your PPF matures, you have three options to consider:
1. Withdraw all your funds at maturity
You can take out the total amount you deposited along with the interest once your PPF account matures. If you choose to close your account, the full amount will be transferred to your bank account, and both the principal and interest are tax-free. Plus, you can enjoy an income tax exemption on investments up to Rs 1.5 lakh each year, meaning you won’t owe any taxes on the money you put in throughout the entire period.
2. Extend your PPF investment for another 5 years
The second option allows you to extend your investment after maturity. The scheme permits extensions in 5-year increments. If you want to extend for another 5 years, just let your bank or post office know at least a year before your PPF account matures. The great part is that during this extension, you can withdraw your money whenever you need it, as the rules for premature withdrawal don’t apply.
3. Continue the scheme without additional investment
You can also choose to keep your PPF account active without making any new contributions after maturity.
Where can you set up a PPF account?
You can open a PPF account at any government or private bank, and you can also do it at any post office branch in your area. There’s even a way to open an account for a minor, but keep in mind that the parents will manage it until the child turns 18. According to the Finance Ministry’s guidelines, a Hindu Undivided Family (HUF) is not allowed to open a PPF account.
How can Rs 5000 turn into Rs 26.63 lakh?
Right now, the Public Provident Fund offers an interest rate of 7.1%, which is calculated annually but set quarterly. The interest rates have remained stable for quite some time. If you invest at this rate for 15 or 20 years, you can build a substantial amount. Check out the calculations below.
After 20 years, the figures will look different because of the power of compound interest, which means your money will keep growing.
Desclaimer: For any financial invest anywhere on your own responsibility, Times Bull will not be responsible for it.