PPF or public provident scheme which is a tax-free investment option can easily make you a crorepati if you start early and continue the investment till you wish to retire such that you have enough cash flow for your sunset years and can rest easy financially by this time.
The investment is flexible and can be made by an individual who earn as low as Rs. 15,000 on a monthly basis as a minimum of Rs. 500 is what is required to keep the account operational. However, the maximum limit for deposits in the account is Rs. 1.5 lakh year. Also, the same holds true if you also maintain the account in the name of your minor child, i.e. a maximum of Rs. 1.5 lakhs can be invested in the two PPF accounts held by you in a financial year.
Notably, interest on PPF and other small saving schemes is revised on a quarterly basis by the government of India on the basis of 10-year government bond yield. Currently for the October-December, the return on PPF account has gone higher to 8% per annum. And the biggest advantage the investment tool offers is the totally tax exempt returns from the investment i.e. all of the contributions, interest earned as well as maturity amount are tax-free plus the earnings of an individual on PPF deposits are compounded annually. This said, an investor gets a guaranteed multiplication on his deposits on an annual basis through annual compounding.
Further, in the PPF account you can decide to invest a fixed amount on a monthly basis or can even opt for a variable monthly or annual amount, however under the option you can transact maximum 12 times to make deposits in a year.
Importantly, the scheme launched by National Saving Institute of the Ministry of Finance computes interest rate on the minimum balance in the account of the PPF accountholder between 5th and last day of the month. So, if your are considering to invest a sizeable corpus in the account do it well before 5th of the month to earn higher interest.
And if you wish to know, how the government-backed safe PPF account which aims to provide sufficient kitty for your retirement years can make you a crorepati, you can use the calculator devised by SBI to understand interest computation on your deposits towards the account.
So, if you are a working individual making handsome earnings, you can start at an early age say 25 years and begin to invest in PPF account. Say, if you invest, Rs. 15,000 on a monthly basis for the next 30 years, until the time you wish to retire, you taking into account the current rate of return, you can sit on the pile of Rs. 2.05 crore that includes Rs. 54 lakh as the principal amount and Rs. 1.51 crore as interest earnings.