The Public Provident Fund (PPF) continues to be a favored investment choice. Renowned for its security, assured returns, and tax advantages, it is highly regarded for long-term financial planning. But did you know that consistent investment in a PPF account can double your money?

PPF is a government-backed scheme with a tenure of 15 years. It currently provides an annual interest rate of 7.1%, which is compounded annually. While this may seem modest compared to market-linked instruments, its compounding power and tax-free returns make it an effective wealth-building tool.

Why PPF Works So Well

  1. Compound Interest: PPF works on compound interest. Each year, the interest earned is added to your balance, and the next year’s interest is calculated on the new, higher amount. Over 15 years, this compounding creates significant growth.
  2. Tax Benefits: Investments in PPF are eligible for deductions under Section 80C of the Income Tax Act. The interest earned and maturity amount are also completely tax-free, enhancing your returns.
  3. Risk-Free Investment: As a government-backed scheme, PPF is one of the safest investment options. Unlike equities or mutual funds, it’s not affected by market volatility.

Also Read: What are the penalties for not having a PAN Card or holding multiple PANs?

Breaking Down the Numbers

Let’s see how your money grows when you make consistent investment through PPF:

  • Annual Investment: Rs 1.5 lakh
  • Total Investment Over 15 Years: Rs 22.5 lakh
  • Interest Earned: Rs 18 lakh
  • Total Maturity Amount: Rs 40 lakh

This calculation assumes you invest the maximum limit every year without fail and the interest rate remains steady at 7.1%.

Tips for Maximising Your PPF Returns

  1. Invest Early in the Year: Depositing your money at the start of the financial year ensures you earn interest for the entire year, maximising returns.
  2. Stay Consistent: PPF rewards long-term discipline. Avoid skipping contributions to leverage compounding fully.
  3. Extend the Tenure: After 15 years, you can extend your PPF account in 5-year blocks. This allows your corpus to grow further without additional tax implications.

Adhil Shetty, CEO of Bankbazaar.com, says, “PPF is ideal for risk-averse investors looking for stable and tax-efficient returns. It suits both salaried professionals and self-employed people, and anyone planning for long-term goals like children’s education, marriage etc. Since this a long-term investment option, investors must regularly invest to let their money gradually grow in this scheme.”

With consistent investment and the power of compounding, PPF can help you double your money. By the end of 15 years, a disciplined approach to investing can increase your money significantly. For those seeking safety and assured growth, PPF is a good choice to secure financial goals.