Do you want to be an owner of a variant-controlled tax-free pension of monthly ₹60,989 after your retirement? Look no further. But, you can accomplish this goal with intelligent and regular investment through PPF, which is a popular mutual fund. Now let me explain to you how one can accumulate a serious sum for pension with the help of PPF.
What is PPF and Why Is PPF Popular Now
The Public Provident Fund or PPF is one of the more widely known saving schemes launched by the Indian government intended to provide for the future requirements of an individual. It falls under EEE category meaning both the principal investment, the interest earned and also the maturity value are tax exempted. This makes it one of the best options for long-term savings in India and the following are the money saving options for a long time.
How to Open a PPF Account?
It is quite simple to open a PPF account. Any common man in India can do it by either going to any post office or any bank. The monthly minimum deposit is ₹500 and the maximum is ₹15,000 while for the annual deposit the minimum amount is ₹500 and the maximum amount is ₹1,50,000. You may deposit at any time of the year from April to March but the best time is when the financial year of the company starts that is from April.
How to Grow Your PPF Account to Crores?
If you start investing ₹1,50,000 annually in a PPF account at the age of 35, you can watch your savings grow dramatically:
• Year 1: With interest earned at the current rate of 7.1% your initial deposit of ₹1,50,000 will be ₹1,60,650 in the first year.
• Year 2: After another deposit of ₹1,50,000 and more interest your account balance will rise to ₹3,10,650.
• After 15 years: Even if you invest a mere ₹1,50,000 each year, your PPF account will total to ₹40,68,209 and the interest earned on the amount will be ₹18,18,209.
At the time, you are 50 years old and have a possibility to renew your account for the next five years, which is possible several times with intervals of five years.
Maximising the Growth of Your PPF
Therefore if you extend PPF account another ten years and add more yearly investments, you find that by the time you are 60 years old, you will be having ₹1.03 crores. This will be your total deposits and important interest what you earned in the financial year.
How to Convert Your PPF Into a Monthly Pension of ₹60,989
• Withdraw the interest: That is, with an accumulated balance of ₹ 1,03,23,126/ – i.e., ₹ 1,03,03,300/- + ₹ 19,826/- The interest to be earned in a year @ 7.1% will be ₹ 7,31,869/-.
• Monthly pension: One way of busting this is to deduct only the interest each year and therefore spreading this amount over 12 months will give a monthly pension of ₹60 989.
• Tax-free income: The great feature is that the interest withdrawn is fully and absolutely tax-free and you get the money in full.