Public Provident Fund (PPF) is not merely a savings scheme, and it can be turned into a right pension plan with an appropriate strategy. Over the years, it has helped millions of people build a substantial corpus for different purposes, including retirement. The Government of India-backed scheme offers tax-free returns and assured growth, making it one of the safest long-term investment options available in the market today. The PPF investment (Rs 1.5 lakh per year), interest earned and maturity corpus are all tax-exempt.
What many investors do not know is that PPF can also serve as a lifetime monthly income plan, essentially a pension plan. The best thing is that there is no market risk involved, and also you do not have to depend on private pension schemes. This guide outlines a smart PPF strategy through which regular savings can generate a fixed monthly income.
In this write-up, we will discuss how much income per month you could earn in future if you invest Rs 5,000, Rs 10,000, or Rs 12,500 per month in PPF. If you are looking for a safe and guaranteed investment instrument to receive a decent monthly income post-retirement, PPF can be a viable option for you.
Here’s how PPF investment can be planned
Once you start PPF, your investment is locked for 15 years, and once it matures, the plan can be further extended in 5-year blocks for any number of times.
If the scheme is extended for five years without making any additional contributions, the closing balance continues to earn interest, which is currently 7.1% per annum. Additionally, investors have the option to withdraw any portion of the total amount once a year, up to 100% of the balance.
PPF Calculator – monthly investment of Rs 5,000
⦁ Monthly investment in PPF: Rs 5,000
⦁ Interest rate: 7.1% per annum
⦁ Total contribution over 15 years: Rs 9,00,000
⦁ Total fund after 15 years: Rs 16,27,284
⦁ Annual interest during extended period: Rs 1,16,427
⦁ Monthly interest: Rs 9,628
PPF Calculator – monthly investment of Rs 10,000
⦁ Monthly investment in PPF: Rs 10,000
⦁ Interest rate: 7.1% per annum
⦁ Total contribution over 15 years: Rs 18,00,000
⦁ Total corpus after 15 years: Rs 32,54,567
⦁ Annual interest during extended period: Rs 2,31,074
⦁ Estimated monthly interest: Rs 19,256
PPF Calculator – monthly investment of Rs 12,500
⦁ Monthly investment in PPF: Rs 12,500
⦁ Interest rate: 7.1% per annum
⦁ Total contribution over 15 years: Rs 22,50,000
⦁ Total corpus after 15 years: Rs 40,68,209
⦁ Annual interest during extended period: Rs 2,88,842
⦁ Estimated monthly interest: Rs 24,070
If you compare all three PPF investment scenarios, the difference in long-term wealth creation is significant.
A monthly investment of Rs 5,000 grows to Rs 16.27 lakh in 15 years, while Rs 10,000 per month builds a corpus of Rs 32.54 lakh. Pushing the contribution to Rs 12,500 boosts the maturity value to Rs 40.68 lakh. In the extended period after maturity, this corpus alone can generate annual interest of up to Rs 2.88 lakh, translating into a steady monthly payout of around Rs 24,000 — effectively working like a risk-free pension.
How to open a PPF account
Any Indian citizen can open a PPF account at any Post Office branch or bank in their own name or on behalf of a minor. The following documents are required for account opening:
⦁ KYC documents for identity verification, such as Aadhaar card, Voter ID, or driving licence
⦁ PAN card
⦁ Address proof
⦁ Nomination form
⦁ Passport-sized photograph
Sources: India Post, ClearTax
