When it comes to investing one’s hard-earned money, one should think twice before making a final decision. While many people love to invest in equities, it comes with a risk and is not suitable for those with a no-risk appetite. Those who look for a better return with zero risk, often end up investing in the Public Provident Fund (PPF). Public Provident Fund is one of the safest investment avenues as it comes with no market risks and triple tax benefits. In the PPF, the principal invested, the interest earned and the maturity amount – all are exempt from tax.
However, these benefits come with a maximum upper limit – one can only invest up to Rs 1.5 lakh per year in the PPF for 15 years. An investment of more than Rs 1.5 lakh per year is not permitted under this instrument.
Also, since the investment appetite of every individual varies from each other, the PPF can be a good risk-free option even for those who could not afford to invest a large amount.
If a person can invest Rs 100 per day or Rs 3000 per month for 15 years in the PPF, he will be getting Rs 9,76,370 at the current prevailing rate of interest of 7.1 per cent.
However, a minor increase in the investment amount can take the maturity amount to over Rs 10 lakhs. Say if a person invests Rs 3080 per month for 15 years, he will get Rs 10,02,407 at the rate of 7.1 per cent.
However, one should be mindful that the PPF interest rate is subject to change and may vary based on the quarterly announcements made by the Ministry of Finance. It is also to be noted that the interest on the investment amount is determined based on the lowest amount available in the account between the fifth day’s closing and the end of that month.
(Disclaimer: Online PPF calculators have been used for this article. Readers are advised to make an informed decision before investing money.)