Also Check: Bank Strike Alert: Banks to Remain Shut for 4 Days – Here’s What You Need to Know!
If you’re looking for a safe, long-term investment that grows your money without the risks of the stock market, the Public Provident Fund (PPF) could be your perfect solution. In fact, investing just ₹100 a day in a PPF account can help you build a corpus of over ₹10 lakh in 15 years.
This government-backed savings scheme combines attractive returns, compounding interest, and tax benefits, making it a favorite for both new investors and seasoned savers.
What is the Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a long-term investment scheme launched by the Government of India in 1968. It’s designed to encourage small savings by offering guaranteed returns, backed by the government.
PPF accounts are managed by post offices and authorized banks, making them easily accessible. The scheme is ideal for anyone looking to save for retirement, children’s education, or other long-term financial goals.
How ₹100 a Day Can Turn Into ₹10 Lakh
The magic of the PPF lies in compound interest. If you invest ₹100 daily, that adds up to ₹3,000 per month or ₹36,000 annually. With the current interest rate of 7.1% per annum (compounded annually), your corpus at the end of 15 years would be:
Approximately ₹10,18,000
This calculation assumes regular monthly investments and no withdrawals. The compounding effect over 15 years significantly boosts your returns.
Why Choose PPF? Top Benefits Explained
1. Guaranteed Returns with Government Backing
Unlike stock markets or mutual funds, PPF offers fixed interest rates reviewed quarterly by the Ministry of Finance. This makes it a safe bet for conservative investors.
2. Tax-Free Earnings (EEE Status)
PPF qualifies under the Exempt-Exempt-Exempt (EEE) category:
- Contributions up to ₹1.5 lakh/year are deductible under Section 80C
- Interest earned is completely tax-free
- Maturity proceeds are also exempt from tax
3. Flexibility in Contributions
You can invest:
- In a lump sum
- Or in up to 12 installments per year
The minimum deposit is just ₹500 per year, making it ideal for all income groups.
4. Loan and Withdrawal Options
- You can take a loan from your PPF balance between years 3 and 6
- Partial withdrawals are allowed after the 5th year
This offers liquidity in emergencies while keeping your savings intact.
5. Protection from Attachment
PPF accounts are protected from court attachment, meaning creditors cannot claim the funds even in case of debt or default.
6. Useful for Minors’ Future Planning
Parents can open PPF accounts on behalf of their children and use it as a dedicated savings tool for education or marriage.
Also Check: Student Loan Bombshell: Even If the Education Dept. Closes, Your Debt Stays—Here’s Why!
How to Open a PPF Account
Step 1: Choose a Bank or Post Office
Most public and private banks like SBI, HDFC, ICICI, and all post offices offer PPF accounts.
Step 2: Submit Documents
You’ll need:
- Identity proof (Aadhaar, PAN card)
- Address proof
- Passport-sized photo
Step 3: Deposit Initial Amount
Start with a minimum of ₹500. You can deposit through cash, cheque, online banking, or UPI.
Step 4: Nominate a Beneficiary
Ensure you nominate someone to receive the amount in case of an unfortunate event.
Step 5: Track and Contribute Regularly
Use internet banking or mobile apps to monitor your contributions and interest earned.
How Interest is Calculated in PPF
Interest is calculated monthly but credited annually. The formula used is:
A = P × [(1 + r)^n – 1] / r
Where:
- A = Maturity amount
- P = Annual contribution
- r = Interest rate (7.1% or 0.071)
- n = Tenure (in years)
Pro Tip: Deposit before the 5th of every month to ensure the amount earns interest for that month.
Extension After Maturity
After the 15-year maturity period, you can:
- Withdraw the full amount
- Or extend the account in blocks of 5 years (with or without contribution)
During the extension period, the account continues to earn interest and remains tax-exempt.
Real-Life Example
Ravi, a 30-year-old IT professional, started investing ₹100 per day in his PPF account in 2010. By 2025, he will have over ₹10 lakh in his account. His consistent, disciplined investment strategy ensured tax savings and secure wealth accumulation for his daughter’s education.
Dos and Don’ts for PPF Investors
✅ Dos:
- Invest before the 5th of every month
- Update nominee details
- Track interest annually
- Extend account after 15 years for continued tax-free growth
- Consider opening a minor’s account for children’s future
❌ Don’ts:
- Don’t exceed ₹1.5 lakh per financial year (excess is not accepted or refunded)
- Don’t skip minimum annual deposit (₹500) to avoid account deactivation
- Don’t withdraw early unless absolutely necessary
- Don’t forget to check quarterly interest rate updates on the Ministry of Finance website.
FAQs
Q1: Can I have more than one PPF account?
No. Each individual can have only one PPF account, excluding accounts opened for minors.
Q2: What if I miss a year’s contribution?
Your account becomes inactive. It can be revived by paying a ₹500 penalty and depositing the missed amount.
Q3: Is PPF better than Fixed Deposit (FD)?
For long-term savings, yes. PPF offers higher, tax-free interest, and better post-tax returns than most FDs.
Q4: Can NRIs invest in PPF?
No. NRIs are not allowed to open new PPF accounts or extend existing ones.
Q5: Is the interest rate fixed?
The rate is revised quarterly by the Ministry of Finance, but remains stable compared to market-linked instruments.
