Investing in PPF scheme not only gives guaranteed returns but also provides tax benefits. This scheme is especially good for those who want to create a safe fund for big expenses like children’s education, marriage or retirement.
If you want to create a big fund by staying away from risk, then PPF is the perfect option for you. By investing just Rs 1 lakh every year, you can not only save tax, but can also prepare a strong financial foundation for big expenses in the future.
You can get a big fund at the age of 40
Suppose you are currently 25 years old and you want to fulfill a big dream at the age of 40, like saving money for your children’s education or buying your own house. In such a situation, if you save just Rs 1 lakh every year and invest in Public Provident Fund (PPF), then in a few years you can create a fund of about Rs 27 lakh.
How is a fund of 27 lakhs created?
The maturity period of PPF scheme is 15 years. If you deposit Rs 1 lakh every year, then your total investment in 15 years will be Rs 15 lakh. The interest you get on this, which is 7.1 percent per annum, will be around Rs 12,12,139. That is, in total you will have a fund of Rs 27,12,139. The most important thing in this is that this entire amount will be tax free.
No risk, no fear of losing money
PPF scheme is run by the government, so there is no risk in it. Your money is completely safe and the interest received on it is also fixed. There is no risk of fluctuations in it like the stock market. This is the reason why this scheme is very popular among employed people and middle class families.
Huge tax exemption too
Investing in PPF also gives you tax relief. Under Section 80C of the Income Tax Act, you get a rebate of up to Rs 1.5 lakh annually. Also, the entire amount and interest received on maturity is also tax free. It has been placed in the EEE category, that is, there is no tax on investment, interest and withdrawal.
How to open a PPF account?
Opening a PPF account is very easy. You can open it through any government or private bank, post office or online platform. In this, a minimum of Rs 500 and a maximum of Rs 1.5 lakh can be invested in a year.
(Disclaimer: Here the advice to invest in stocks has been given by the brokerage house. These are not the views of Zee Business. Consult your advisor before investing.)
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