Guaranteeing a fixed income after retirement is a lifelong concern for many. Given the market’s volatility, it has become highly uncertain what the returns will be—one of the most effective investment options available in the Public Provident Fund (PPF). PPF is a long-term investment plan that renders assured safety of returns along with a decent interest rate. With an investment period of around 15 years, it can be deemed a safe form of investment to secure your retirement plans.
The returns to be had at the end of the tenure can be easily ascertained through a PPF calculator. A PPF calculator will help you estimate the interest earned on the principal amount invested and the final amount at the end of the maturity period. Many online PPF calculators, like Scripbox, help you keep track of your returns.
Reasons Why PPF Investment Is A Great Option For Your Retirement
Having a PPF account brings numerous advantages that will seem most agreeable to your retirement plan. Following are some of the benefits of a PPF account:
Tax Benefits
Section 80C of the IT ACT provides tax exemption in a PPF account.
There is no taxation in the PPF account.
The highest amount to be invested in a year in a PPF account is 1.5 lakh: this implies that no tax would be levied on any amount up to rupee 1.5 lakh. However, if the amount invested is more than this, the surplus amount will not get the benefits availed to a PPF account, including the tax exemption.
Interest Rates
The interest rates for a PPF account are revised by the Central Government every quarter. The interest rates of PPF are generally considered to be better than those of many other investment options in the market. As of April to June 2020, the interest rate for PPF is around 7.1%. As the interest amount is also compounded along with the principal, you can withdraw the interest money or keep it accrued along with the principal amount. A PPF calculator will help you see how much the interest earned would add to the maturity value through the compounding method.
Safe Investment
One of the most important reasons a PPF account is an excellent investment option for your retirement is that they are highly secure.
Your investments with a PPF account will make steady growth with negligible risks.
The government itself assures you of the security of your investment. Hence, it is ideal for those who do not want to take risks and need a secure retirement plan.
Tenure Extension
The general investment tenure for a PPF account is 15 years. However, one can extend it to an extra five years if needed. With this option’s help, one can safely get through his working years and then correspond to the retirement period with the maturity period of the PPF investment. Use a PPF calculator to know whether the 15-year period would suit you or if another five years would benefit you more.
Important Information Relating To the PPF Account
Having learned about the PPF account benefits regarding your retirement plans, it is equally important to remember certain relevant things about the PPF account.
Opening a PPF Account
You can open a PPF account with any nationalized or other reputed bank providing the facility. An application form will be required to fill in, and you will have to submit relevant documents such as your identity, address, and income proof.
Eligibility Criteria For Opening a PPF Account
All it needs to be eligible to open a PPF account is to be a citizen of India. An NRI cannot open a PPF account. Moreover, one cannot extend more than a single PPF account.
Minimum and Maximum Amount One Can Deposit
The minimum amount you can invest in a PPF account is Rs. 500. This implies that you cannot support anything less than Rs 500 per annum to maintain a PPF account. The maximum amount to be financed is Rs 1.5 lakh. More than Rs 1.5 lakh will not come under PPF benefits.
Premature Closing Of The Account
The account can be closed prematurely only after five years, and that too for minimal and specific reasons. These can be the illness of a spouse, parent, or children or for education or other such urgent financial needs.
Minor PPF Account
Parents maintain A minor PPF account for a child under eighteen years of age. The parents cannot choose to open separate PPF accounts for the same child.
Loan Against PPF Account
However, Loans can be availed against a PPF account with certain conditions. Only 25% or less of the PPF total amount can be satisfied for the loan facility in the given period. The maximum period for the repayment of the loan is to be three years.
Using A PPF Calculator
Using a PPF calculator is relatively simple. You will need to add information, such as the tenure of the PPF account. If you have extended five years, the same should be added to the PPF calculator. Further, you will need to add the deposit amount and interest rate. With these details’ input, your PPF calculator will reflect your maturity amount at the end of the tenure.
A PPF account, therefore, clearly appears to be a perfect option for your retirement plans. With steady interest rates, the rate of returns to be expected from it is also pretty high. Apart from this, its risks are extremely low or negligible, almost next to nothing. One can easily start an early investment with a PPF account and calculate due returns with a PPF calculator’s help. Provided the easy criteria of opening a PPF account and the burden-less mode of yearly deposit, you will surely benefit from it in the long run.
But you can make the most of your retirement plan with the help of a PPF account. Having said all this, learning the necessary facts related to PPF investment is also important. It is essential to be a sound and learned investor, no matter how low the risks are in the type of investment you opt for.
