Public Provident Fund: Want to become crorepati with PPF? Here’s what it will take

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Updated: October 30, 2019 10:48:22 AM

Public Provident Fund investment in Post Office: Becoming crorepati fast is a life goal for many millennials making a fresh start in the job market.

ppf investmentPPF can help you accumulate Rs 1 crore. representational image/Pixabay

Public Provident Fund investment in Post Office: Becoming crorepati fast is a life goal for many millennials making a fresh start in the job market. While their dream can come true easily if they can raise their income level fast, maybe, by landing a high-paying job or running a successful new business, it may take a very long time for those dependent on modest monthly salary. Such persons can, however, plan their saving and investment strategy smartly to reach their financial goal. Post Office Public Provident Fund (PPF) can help those investors who are not ready to take any kind of risk with their money and want guaranteed return.

The PPF account can be opened in a Post Office which is Double handed and above, according to the official Post Office website. Double handed post office means the one that is managed by two officials.

The current interest rate on PPF account is 7.9 per cent per annum. It is revised quarterly by the Government and the PPF account enjoys sovereign guarantee.

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Calculating at the current interest rate,  a PPF account holder with Post Office can accumulate around Rs 1.2 crore in 25 years by depositing Rs 1.5 lakh per year. Remember: Rs 1.5 lakh is the maximum limit for investment in PPF to enjoy the benefits that come bundled with the scheme. It falls in the ‘Exempt-Exempt-Exempt’ category, which means investment, interest earned and the amount withdrawn on maturity in PPF is not taxed. Also, the average interest rate in PPF in the last many years has been around 8 per cent.

PPF account can also be opened public and private sector banks like SBI, HDFC Bank, ICICI Bank etc.

Some other benefits of PPF account include loan facility. You can take loan against the PPF account deposit “any time after the expiry of one year from the end of the year in which the initial subscription was made but before expiry of five years from the end of the year in which the initial subscription was made”, according to Post Office website. The subscriber need to apply in Form D for loan together with his passbook to the Accounts Office for obtaining the loan. The loan amount demanded by the subscriber should not exceed “25 per cent of the amount available to his credit at the end of the second year immediately preceding the year in which the loan is applied for.”

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