Public Provident Fund: What Rs 1.5 lakh a year may give you in 15, 20, 25 years

By: |
New Delhi | Updated: September 24, 2019 6:19:43 PM

Public Provident Fund (PPF) investment: For those scared of market volatility, PPF comes across as a safe investment option with a bag full of benefits.

public provident fund calculation chart Public provident fund calculation chart: Rs 1.5 lakh/year in PPF can grow up to Rs 1.1 crore in 25 years! Representational image/Pixabay

Public Provident Fund (PPF) investment: For those scared of market volatility, PPF comes across as a safe investment option with a bag full of benefits. Return on PPF investment is guaranteed as it is a government-backed small savings scheme. Of course, the interest rate on offer in PPF is not what one may expect from equity investment. But taking the risk factor of equity and mutual fund investment into account, the PPF interest rate may appear to you healthy.

In the last five financial years, the interest rate on PPF investment has remained in the range of 7.5-9 per cent. The current PPF interest rate is 7.9 per cent and it is reviewed by the government on a quarterly basis. PPF investment also comes with triple tax benefits with an investment limit of Rs 1.5 lakh per year. The amount invested in PPF, interest earned and the amount withdrawn on maturity are exempted from income tax net.

By investing the maximum limit of Rs 1.5 lakh per annum in PPF, you can accumulate a large lump sum. Although, the maturity period of PPF account is 15 years at present, you can extend the account for a period of five years each on request and continue investing and earning.

The following calculation will give you an idea of how much your investment of Rs 1,50,000 per year would grow into in 15 years, assuming the interest rate remains at 7.9 percent.

Public Provident Fund: Calculation chart at 7.9 percent interest

You can see from the chart above that Rs 1,50,000/year investment in PPF account can grow up to Rs 43,50,547 in 15 years if the interest rate remains at 7.9 per cent. Following the same calculation (as in the chart above), your annual investment of Rs 1.5 lakh in PPF account can grow up to around Rs 70 lakh and Rs 1.1 crore in 20 and 25 years respectively if the interest rate remains unchanged.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Will external benchmark bring down loan rates?
2Does your spouse’s credit score impact your loan eligibility?
3Going to enhance life insurance cover? Know, for how much sum assured you may apply