Guaranteeing a fixed income after retirement is a lifelong concern for many. Given the market’s volatility, it has become highly uncertain as to 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. There are many online PPF calculators, like Scripbox, to help you keep track of your returns.
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:
Section 80C of the IT ACT provides the provision of 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.
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 out there 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 choose to withdraw the interest money or keep it to get 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.
One of the most important reasons why a PPF account works as 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 option.
The general investment tenure for a PPF account is 15 years. However, one can extend it to an extra 5 years if they need to. 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 years period would be suitable for you or if another 5 years would benefit you more.
Having learned about the PPF account benefits regarding your retirement plans, it is equally important to keep in mind certain relevant things about the PPF account.
Opening a PPF Account
You can open a PPF account with any nationalized bank or any other reputed bank providing the facility. An application form will be required to fill in, following which you will have to submit relevant documents such as your identity proof, address proof, 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 open 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 invest anything less than Rs 500 per annum to maintain a PPF account. The maximum amount to be invested is Rs 1.5 lakh. The amount 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 5 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 needs for finance.
Minor PPF Account
A minor PPF account is maintained for a child under eighteen years of age by the parents. The parents cannot choose to open separate PPF accounts for the same child.
Loan Against PPF Account
Loans can also be availed against a PPF account, though with certain conditions. Only 25% or less of the PPF total amount can be availed for the loan facility in the given period. The maximum period for the repayment of the loan is to be 3 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 made an extension of 5 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 the maturity amount you will have 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 are also pretty high. Apart from this, the risks involved with it 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 along with the burden-less mode of yearly deposit, you are sure to benefit from it in the long run. In simple words, you can make the most of your retirement plan with the help of a PPF account. Having said all these, it is also important to learn the necessary facts related to PPF investment. It is essential to be a sound and learned investor, no matter how low the risks are in the type of investment you are opting for.