Everyone wants to enjoy a huge retirement corpus but no one wants to invest and save the money in the long term. People want money to sit and enjoy but none of them wants to put hard yards to become financially independent. However, the pandemic has taught people to invest in various financial institutions to save for the future. The second wave is closing the whole country again in bits and pieces. In a time of distress, we are here to bring out one piece of news that can excite you. If you’re someone who believes that the stock market will be a dangerous place to invest, here is the safest way. We are talking about the Public Provident Fund which is backed by the Government of India. In this article, we discuss how you can become a crorepati by investing in PPF.
What is a Public Provident Fund?
The Public Provident Fund is a savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits. The Public Provident Fund (PPF) Scheme was introduced by the National Savings Organisation in 1968 aiming at making small savings a lucrative investment option. A PPF account matures in 15 years, after which you can either withdraw all your money or extend the PPF account for a block of 5 years each. To note, a PPF account can be opened by any Indian resident, over 18 years of age, for themselves or for anyone else in their family and there is no upper age limit for opening a PPF account. So, here we come out with ways to make money out of PPF or how to become a Crorepati by investing in PPF.
Every year at present in a Public Provident Fund a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh per annum can be deposited. The open secret for reaping a good return from your investment lies in the fact that you start saving from a very early age and continue doing so in a disciplined manner. The Public Provident Fund or PPF is one such investment option giving you long-term benefits.
Currently, the Public Provident Fund offers interest at the rate of 7.1%. As mentioned in the last paragraph, a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh per year can be deposited every year in your PPF account. It is noted that deposits can be done in a maximum of 12 transactions.
What are the returns?
On investing the maximum sum of money in Public Provident Fund, that is, Rs. 1.5 lakh per year, it will make a person a Crorepati in long term. So let us assume, a person invests Rs. 1.5 lakh per year at an interest rate of 7.1% at the age of 20. Let’s assume he/she continues to invest for 30 years (15 years of normal lock-in period and extension of 4 consecutive blocks) he will be investing a total amount of Rs. 45 lakh. At maturity (after 30 years) he will get Rs. 1,54,50,911. So the total wealth that the person would have gained would be Rs. 1,09,50,911. Therefore, we get to learn that the Public Provident Fund (PPF) is a good investment tool on a long-term basis. And in times of situations like the present pandemic where you have to face economically and financially, schemes like investing in Public Provident Fund helped many people. Though there came situations wherein people had to withdraw from PPF accounts but it is advisable not to do so since it is beneficial on a long-term basis. So never withdraw your investment from the PPF account visualizing it on a short-term basis.
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