Kolkata: The most important thing about investments is that an individual as to give it time — much like a banyan tree that become big if the person can wait for some time. It does not matter much if the amounts are not big. Since one has to give time, one has to start early. Also one has to keep investing without a break. Significantly, this tactics work with PPF too, which is one of the time-tested investment instruments in India that was launched in 1968 and has been trusted by generations.
Just by using a PPF calculator it become clear to anyone. And one can become a PPF crorepati with full peace of mind. In the calculation below, one has assumed that the rate of interest in PPF continues at 7.1% throughout the tenure of calculation and that the individual keep investing during the entire term without fail. If you follow this condition, you are well on the way to becoming a crorepati.
What is PPF
The Public Provident Fund is an investment scheme that is backed by the government of India. Any Indian citizen can invest in this scheme. The interest paid is determined by the government once every three months and is kept at a slightly higher rate than the yield of the 10-year G Secs. Significantly, it has been maintained at 7.1% for `a few years.
Investing in PPF
Amount invested every year: Rs 150,000
Rate of interest: 7.1%
Years of investment: Rs 25 years
Amount invested: Rs 37,50,000
Interest earned: Rs 65,58,015
Total value: Rs 1,03,08,015
Now let’s demystify he above numbers. Let us assume that a 25-year old begins to invest in PPF. He/she opens a PPF account and puts Rs 1.5 lakh a year in it. Year after year. If the investment continues for 25 years, the amount that he/she would be investing from his/her pocket is Rs 37,50,000. Over the entire period it would earn him/her Rs 65,58,015 as interest. Therefore, the total amount will come to Rs 1,03,08,015, o more than Rs 1.03 crore.
Please note that Rs 1.5 lakh is the maximum amount that one can invest in a PPF account in a year. The lock-in period of a PF account is 15 years but one can keep increase the investment period by multiples of five years. So the tenure can be raised to 25 years and even beyond.