PPF provides benefit up to Rs 1.5 lakh in a particular year for investors. Anyone with a PPF account can avail up to 1.5 lakh rupees of income tax exemption per year in the PPF account. The compulsory lock-in period is of 15 years.
The compulsory lock-in period is of 15 years. After the lock-in period, you can still opt to continue with your PF account either by extending to invest or without any more investment. We can do the continuation in a block of 5 years and further extended up to the tenures of 20, 25, 30 years.
With average monthly investments, it is quite tough to make one crore without equity exposure. Long term investments in Public Provident Fund will do the trick with the power of compounding.
It is a safety scheme strengthened by the Government of India that offers 7.1 percent of interest rates and, the returns exempted from the tax. PPF offers EEE tax benefits where interest earned in this cycle, contribution and, maturity gains are all tax-free.
How does it work?
Continue to invest in PPF even after the 15-year lock-in period, till the corpus advances to Rs 1 crore.
From the beginning of your career, if you are willing to invest around rupees 4.5K to 5K every month, in about 35-years you can have crores of Rupees in your account through PPF.
One of the quickest time frames to reach Rs 1 crore is by making monthly investments of rupees 7K for 30 years or 10k for 25 years every month.
As the maximum annual investment limit of Rs 1.5lakh, you can invest a maximum of Rs 12.5K, to reach the 1 Crore target in 23 years.
As extension takes place only in 5 years block, you cannot withdraw the amount before 25 years. You can also invest for 15 years and then neglect the funds with PPF to reach Rs. 1 crore with interest.
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