PPF Account Update: PPF (Public Provident Fund) has been the preferred investment option for a long time. Investment in this is not only safe but also gets triple benefit of tax exemption, due to which its charm remains.
The amount deposited in the PPF account earns interest at a fixed rate, which is revised every quarter by the government. Right now its rate is 7.1 percent. However, here is a hitch in the interest calculation, which you can understand to increase your returns to some extent. Since, investment in PPF is fully protected by the government, there is no risk involved in investing in it. Invest between April 1-5, the money will increase, then the interest is calculated on the balance between the 1st to 5th of every month on the money deposited in the PPF account.
In such a situation, try to deposit money in the PPF account between the 1st to 5th date. Apart from this, if possible, instead of putting money in the account little by little throughout the year, deposit the money only between April 1-5, this will bring more interest to your account.
Benefits of Investing in PPF
• Triple Benefit: There is a triple benefit on investment in PPF. In this, tax benefit is available under section 80C on investment up to Rs 1.5 lakh. The interest earned on this investment is tax free and there is no tax to be paid on the maturity amount.
Option to become a millionaire: There is a lock-in of 15 years on investment in PPF. After 15 years, you can withdraw money from PPF account or increase it in blocks of 5-5 years. If you continue to invest in it for 25 years, then the maturity amount will exceed Rs 1 crore. For example, if the current rate of 7.1 per cent of PPF is maintained for the next 25 years, then after 25 years, an annual investment of Rs 1.5 lakh will yield a maturity amount of Rs 1.03 crore.
Loan facility: There is facility to take personal loan against PPF account. This benefit can be taken in the third and sixth year from the opening of the account. This is especially beneficial for those who want to apply for a short term loan and do not want to pledge any assets. There is also an advantage of taking loan benefit from PPF account that interest has to be paid at a lower rate than the loan taken from banks. In its repayment also, there is a facility to pay in lump sum or in installments.
