Everyone wanted to secure their future. And for that, people have done so many things. Some are investing money or something or some people saving their money in bank accounts. But if you wanted to start investing or are looking for a way to earn good money from interest, then the Public Provident Fund (PPF) scheme is the best.
PPF
Any citizen of India can invest in it. The biggest thing is that the benefits found in it remain the most preferred. Banks and post offices themselves tell the benefits of investing in PPF. Great interest, tax-free investment, money received on maturity completely yours. It is a great tool from an investment perspective. The maturity period is 15 years. But, even after 15 years, the investment can be extended. If you give an extension, then your returns (PPF return) will run at the speed of the rocket and you will see when the initial investment of Rs 5000 will exceed 26 lakhs.
There will be 3 options on maturity
At the time of maturity, you get 3 options. It is very important to understand these 3 options. First, withdraw your money after maturity. Secondly, even if you do not withdraw, interest will continue to be received. Thirdly, you can give an extension for 5 years with new investment. Let’s understand how and what to do.
1. Withdraw all the money on maturity
Withdraw the amount and interest from your side on the maturity of the PPF account. In the event of account closure, the entire money will be transferred to your account. The money and interest received on maturity will be completely tax free. Apart from this, income tax exemption is available on investment up to 1.5 lakh every year. There will be no tax on the money you have deposited in the entire tenure.
2. Extend PPF investment for 5 years
The second option is to increase the investment after maturity. In the scheme, the option of account extension is given in the tenure of 5-5 years. However, if you want an extension for the next 5 years, then you have to tell the bank or post office 1 year from the maturity of the PPF account. The good thing is that the rule of pre-mature withdrawal does not apply at the time of extension and you can withdraw money at any time.
3. Increase the scheme without investment even after maturity
The third option in a PPF account, even if you do not choose both the above options, the account will continue after maturity. There will be no need for new investment. Maturity will automatically increase for 5 years. But, the biggest advantage will be that you will continue to get interest on the deposited amount throughout this period. After this, it can be extended again after completion of 5 years.
How to make 5000 Rs 26.63 lakh?
The Public Provident Fund is currently receiving 7.1% interest. Interest is calculated annually. But, it is decided on a quarterly basis. There has been no change in its interest rates for a long time. Let’s say that if you invest at the same interest rate for 15 or 20 years, then a large corpus will be created on different amounts.
See the calculation
If you invest Rs 5,000 per month or Rs 60,000 per year, your total investment over 15 years will be Rs 9 lakh, you will get Rs 7.27 lakh interest, and your maturity amount will be Rs 16.27 lakh.
However, if you extend your investment for the next five years i.e. a total of 20 years, your total investment will be Rs 12 lakh, you will get an interest of Rs 14.63 lakh and your maturity amount will be Rs 26.63 lakh.
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