PPF Account Less Investment More Benefit: Understand This Complete Mathematics
Understand this complete mathematics PPF account is a safe and strong option for the common investor. Gives you more returns in less time. Not only this, under this scheme you get a good income tax exemption.
Employees of government or non-government companies are always confused about the savings scheme. However, there are various schemes related to this in banks. If you know about them then you can avail these schemes. One such scheme is PPF. The interest rate in these accounts is also attractive and your money is safe.
The biggest feature of these accounts is that the principal invested under it and you get good interest on it. Also it is tax free. You can get exemption under ’80 c’ of Income Tax Act.
Not only this, under this scheme you get maximum tax exemption. Triple E is its biggest feature. Which is called tax exemption. You get a discount during investment, growth also comes in the range of discount, the amount you get at the time of maturity is also in the range of discount.
PPF interest rate of 7.9 percent:
The government has reduced the interest rate by 0.10 per cent for the July-September quarter. Now the interest on PPF account is 7.9 per cent. Currently, these are still the best and safest options for investors to save, where your money doubles before FD.
The minimum and maximum limit for investment in this scheme is also convenient. An annual investment from Rs 500 to Rs 1.5 lakh is made and its time period is up to 15 years. A minimum investment of up to Rs 500 can be made to keep PPF account active.
PPF is a long term plan of 15 years, the effect of compounding is the best in PPF. The minimum and maximum annual investment in PPF is Rs 500 and Rs 1.5 lakh. At the same time, PPF contributions are required every year for 15 years to keep the PPF account active.
You can keep PPF account active by investing a minimum of Rs 500 during a financial year. You will get interest on the outstanding balance in PPF account.
Effect of Compounding on PPF:
For example, if the PPF interest rate is 8 percent per annum over a period of 15 years. So the maturity value will be around Rs 43,50,547 if you invest Rs 1.5 lakh each year. Where the principal is 22.5 lakh rupees and interest will be about 21,00,547 lakh rupees. Which makes 48.28 percent as interest amount.
Now, assume that Rs 1.5 lakh is invested every year for the initial 10 years only and then only Rs 500 is invested for the last 5 years to keep the PPF account active. The maturity value would then be around Rs 34.5 lakh, with 56 per cent interest. In this case, the amount of interest earned in the last five years on the total additional contribution of Rs. 2,500 will be about Rs. 11 lakhs.
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