PPF - How to retire at 40: PPF offers guaranteed returns with triple tax benefit with a fix maturity period of 15 years.
Public Provident Fund: Planning to retire early? 40 is probably the most talked-about age for wannabe early retirees. If you are also one of them, you may be wondering how you can retire with some hard cash in hand that will see you through in the years beyond 40. While there are several investment options for which you should ideally seek expert advice, here’s a look at how you can retire at 40 with at least guaranteed Rs 40 lakh with the popular Public Provident Fund (PPF) scheme of the government.
PPF offers guaranteed returns with triple tax benefit with a fix maturity period of 15 years. Your investment PPF, interest earned and the amount withdrawn on maturity would not be taxed as per the rules.
The current rate of interest on PPF is 7.9 per cent, which is compounded annually. The interest rate is not fixed for the entire maturity period. Since 2016, the government is revising the interest rate of PPF and other small savings scheme every quarter.
Coming back to our initial question – How to retire at 40 with Rs 43 lakh? Here’s the answer:
You must have read it multiple times that all retirement planning should be done early. If you want to retire early, you should start planning and investing early.
At the current 7.9 per cent interest rate, you can get a little over Rs 43 lakh if you start investing Rs 1.5 lakh every year from the age of 25. Your account will mature after 15 years, and as the following chart shows, your total corpus would be over Rs 43 lakh.
Public Provident Fund Calculation Chart 2019
- Note: PPF interest rate can change several times before the maturity of your account. Your total corpus may go up if the rates rise. In the last five years, the average interest rate on PPF has been around 8 per cent.
You can use the PPF corpus to buy an annuity scheme from LIC to ensure a steady flow of cash for life.