Retirement planning: One wants to improve their financial life and many people dream of becoming a millionaire. To fulfill this dream, choosing the right investment is very important. Public Provident Fund (PPF) is one such safe and profitable investment option, which not only gives good returns but is also a great way to save tax. Let’s know how PPF can help you become a millionaire.
What is PPF and its features
Public Provident Fund or PPF is a government savings scheme, designed for long-term investment. It has a maturity period of 15 years, and a minimum of Rs 500 to a maximum of Rs 1,50,000 can be deposited in it every financial year. Currently, PPF offers 7.1 percent annual interest, which is fixed on a quarterly basis. It is an individual account, so the facility of joint account is not available in it, but there is a provision for nominee.
Why PPF is considered a better option
PPF is considered a better investment option because it comes under the EEE (Exempt-Exempt-Exempt) category. This means that the investment made in it, the interest received and the entire amount received on maturity, all three are exempt from income tax. Under Section 80C of the Income Tax Act, one gets the benefit of tax exemption on investment up to Rs 1,50,000 every year. Apart from this, it is a government scheme, due to which the investment remains completely safe.
Who can invest in PPF
Any citizen of India can open a PPF account. This account can be opened in a post office or any bank. Guardians can also open an account for minor children, but this arrangement remains valid only till the child turns 18 years old. People of all classes can avail the benefits of PPF, whether they are employed, businessmen or housewives.
How to become a millionaire with PPF
You can also become a millionaire by investing regularly in PPF. Suppose you are 25 years old and you invest the maximum amount of Rs 1,50,000 in PPF every year. At the end of the first year, you will get an interest of Rs 10,650 at the rate of 7.1 percent, taking your account balance to Rs 1,60,650.
If you deposit Rs 1,50,000 again next year, your balance will become Rs 3,10,650. The interest on this amount will be Rs 22,056. This is the magic of compound interest, where interest earns interest. On completion of 15 years, you will have Rs 40,68,209 in your account, of which Rs 22,50,000 will be your investment and Rs 18,18,209 will be the interest.
PPF is a safe and profitable investment option,
which is a good way to grow your money and save tax in the long term. By investing regularly and in a disciplined manner, you too can fulfil your dreams through PPF and become financially strong. If you are planning to invest for the future, PPF is definitely an option worth your consideration.