Public Provident Fund (PPF) has always been a preferred choice for investors seeking a secure future and financial independence. Completely protected from market fluctuations, this scheme not only ensures capital protection but also helps build a substantial corpus over the long term. Backed by a government guarantee, this scheme is ideal for those seeking to achieve their savings goals without any risk.

Key Benefits of PPF Investment

The biggest advantage of investing in PPF is its stability. Stock market volatility does not affect this scheme. Furthermore, the tax benefits it offers set it apart from other investment instruments.

• Income Tax Exemption: The amount invested is eligible for tax exemption under Section 80C of the Income Tax Act.
• Tax-free returns: The biggest feature of PPF is that the interest earned and the entire amount received on maturity is completely tax-free.
• Minimum and Maximum Investment: A minimum investment of Rs 500 and a maximum of Rs 1.5 lakh can be made in a financial year.
• Attractive interest rate: Currently, the government is offering an annual interest rate of 7.1 per cent on PPF, which is more competitive than the fixed deposit (FD) rates of many banks.

Investment period

The original tenure of a PPF account is 15 years. However, if the funds are not immediately needed after maturity, they can be extended in blocks of 5 years each. Investors must fill out a prescribed form and choose the extension option, allowing them to continue receiving the benefits of compound interest over a longer period.

Journey from Rs 1000 per month to Rs 18 lakh

It's often believed that building a substantial corpus requires significant investments, but with PPF, discipline and timing are more important. If someone starts investing just ₹1,000 per month, their annual investment will be ₹12,000

Lets assume that the investment is initiated at age 25 and continued for a total of 35 years until age 60. The total amount deposited by the investor during this period would be approximately ₹4.20 lakh. At the current interest rate of 7.1 percent, the maturity amount at retirement at age 60 could be approximately ₹18.14 lakh. It's worth noting that approximately ₹14 lakh of this total amount will be received as interest alone, and this entire amount will be tax-free.

Future prospects

Currently, the government has not made any changes to the interest rates on small savings schemes. However, these rates can be expected to increase in the future due to potential changes in the repo rate following the Reserve Bank's monetary policy review. If interest rates rise, returns for PPF investors could improve even further. PPF remains a solid option for building a secure and tax-free financial foundation.