If you put Rs 1.5 lakh every year in PFF at the beginning of a financial year, then one can accumulate a corpus of Rs 1.08 crore by the end of the 24th year.
New Delhi:
The BSE Sensex has corrected over 4,500 points since it made an
all-time high of 38,989.65 in the month of August. Worries over rising
crude oil, falling rupee and a debt default by some of the group
companies of IL&FS has triggered a massive selloff in the market.
Although correction in the equity market is a normal phenomenon, the
recent sharp correction has spooked many small investors, who have
entered the market recently.
Undoubtedly, equity is the best asset to create long-term wealth but
those who cannot bear the short-term volatility, they can stick to fixed
interest earning instruments like Public Provident Fund (PPF). Along
with providing fixed interest every year, PPF also provides tax benefit
at various stages. PPF is also considered as one of the safest
instrument as it has government backing.
PPF falls under the 'EEE' category, which means that PPF contribution,
interest earned on PPF and PPF maturity proceeds are exempted from tax.
One can invest up to Rs 1.50 lakh in an EPF account per annum.
PPF investment has become more attractive recently after the government
revised interest rate on small savings schemes for the October-December
quarter. The interest rate on PPF has been revised from 7.6 per cent to 8
per cent now. It may be noted that the government fixes the interest
rate on PPF every quarter.
A PPF account matures in 15 years but one can extend the maturity by a
block of 5 years for multiple time by giving an application.
Meanwhile, in PPF, loan and partial withdrawal benefit are also
available. PPF account holders can avail a loan between the third and
sixth financial year of opening the PPF account. The maximum amount of
loan one can avail on his PPF account is of 25 per cent of the total
amount accumulated in the account by the end of the second fiscal year
preceding the year in which the loan was applied for. After the
completion of the sixth financial year or from the beginning of the
seventh financial year, the PPF account holder becomes tax-free partial
withdrawals. The maximum partial withdrawal amount is capped at 50 per
cent of the account balance at the end of the fourth financial year
preceding the year in which withdrawal is made or 50 per cent of the
account balance at the end of the previous financial year, whichever is
lower.
With the above benefits, it is worth investing in PPF for the long term,
say financial planners. One can also become a crorepati by investing in
PPF regularly. If you put Rs 1.5 lakh every year in PFF at the
beginning of a financial year, then one can accumulate a corpus of Rs
1.08 crore by the end of the 24th year assuming that 8 per cent interest
remain constant throughout the entire 24 years tenure. Here is an
illustration that shows one can become a crorepati in 24 years by
investing in PPF account.
Source: Times Now News)
If a PPF account holder continues the account for 30 years, then he will
be able to accumulate Rs 1.83 crore by the end of 30 years.
Here are few facts About PPF
-Interest rate : 8% (for Oct-Dec 2018)
-Duration of the scheme: 15 years
-Minimum deposit amount (per year): Rs 500
-Maximum deposit amount (per year) : Rs 1,50,000
-Number of instalments every year: 1 (min) to 12 (max)
-Number of accounts one can open: Only One
-Lock-in period: 15 years (partial withdrawals can be made from the sixth year)
-Extension of PPF Account:: After the maturity period (15 years), it can be extended by a block of 5 years for multiple times
-Tax savings (contribution) : Under section 80C (up to Rs 1.5 lakh)
-Tax savings (interest earned and final amount): fully exempted from wealth tax
-Duration of the scheme: 15 years
-Minimum deposit amount (per year): Rs 500
-Maximum deposit amount (per year) : Rs 1,50,000
-Number of instalments every year: 1 (min) to 12 (max)
-Number of accounts one can open: Only One
-Lock-in period: 15 years (partial withdrawals can be made from the sixth year)
-Extension of PPF Account:: After the maturity period (15 years), it can be extended by a block of 5 years for multiple times
-Tax savings (contribution) : Under section 80C (up to Rs 1.5 lakh)
-Tax savings (interest earned and final amount): fully exempted from wealth tax
-Who can open: Resident Indians, 18 years or older, can open PPF
account. Parents can also open PPF account in the name of their minor
child
Source : https://www.timesnownews.com/
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