Public Provident Fund: PPF Investments Can Make You a Crorepati; Follow These 3 Simple Tips

Want to become a crorepati with PPF? Then we have a perfect trick for you. Long term periodic investment in few investment avenues such as the Public Provident Fund can do the wonders with the power of compounding.

Public Provident Fund: PPF Investments Can Make You a Crorepati; Follow These 3 Simple Tips
PPF Account

Want to become a crorepati with average monthly investments? Then we have a perfect guide for you. Long term periodic investment in few investment avenues such as the Public Provident Fund can do the wonders with the power of compounding.

For reaching the target of Rs 1 crore, the amount you invest monthly & the period of investment that you are willing to commit plays a vital role. You are well aware that the longer the money stays invested, the more it grows. It is to be noted that one can only invest Rs 1,50,000 in PPF in a year.

Why to invest in Public Provident Fund (PPF)?

PPF is considered to be one of the safest debt instruments as it has sovereign backing of the government. Various savvy investors use PPF to meet the debt part of investment portfolio. 

What are the benefits of PPF?

  • The most interesting benefit of PPF is it offers one of the highest returns amongst fixed income options, that too with tax benefits. 
  • Investors can claim tax deduction under section 80C of the Income Tax Act for the amount invested up to Rs 1.5 lakh in a given year, under PPF.
  • Public Provident Fund is a long-term commitment product. It comes with a lock-in of 15 years. Therefore, if you are planning to invest in PPF, remember long-term goals like retirement, child education, marriage, etc. 
  • You can choose to continue with your account either by continuing to invest or without any more investment even after the mandatory lock-in of 15 years. The extension can be done in a block of 5 years, which can be extended to 20, 25, 30 years and so on.

PPF

 

Tricks to become a Crorepati from your PPF Account:

1. Once the 15-year lock-in period is done, you can continue to invest in your PPF account till the corpus grows to Rs 1 crore. If at the starting of your career you are willing to a monthly investment of, say, Rs 4,585, then you will be a crorepati in about 35 years by PPF. You can reach that amount mentioned in your PPF account attracts the current interest rate of 7.9 per cent, & stays the same for the complete investment time-period. 

2. If you want to achieve Rs 1 crore target faster, then make a monthly investment of Rs 10,720 for 25 years. By an annual maximum investment limit of Rs 1.5 lakh, you can make a maximum outgo of Rs 12,500 monthly in PPF, & can reach your target in around 23 years. Though, you will not be able to withdraw the money before 25 years duration, as an extension happens only in the block of 5 years.

3. Stop making an investment after the initial lock-in of 15 years. First make investments for 15 years and then leave your PPF account to earn interest. Then, keep growing until it becomes Rs 1 crore. To reach your Rs 1 crore target in 35 years, make monthly investments of Rs 6,270 & keep investing for the whole tenure. At the end of 15 years, the amount will grow to Rs 21.87 lakh. Don’t invest further, leave the funds in your account for next 20 years & it will grow to Rs 1 crore. You can also reach the target in just 30 years by making monthly investments of Rs 9,165 for the initial 15 years, & keep the corpus for the next 15 years with PPF.