There are many such schemes of the government, in which investors get guaranteed returns on investment and money is also completely safe.
Benefits of investing in PPF scheme: The habit of small savings can make you the owner of guaranteed lakhs of rupees in future. There are many such schemes of the government, in which investors get guaranteed returns and money is also completely safe. Post Office Public Provident Fund (PPF) is also such a scheme, in which if invested from a long-term perspective, not only will it become a fund of lakhs of rupees. Rather, money will also be completely safe and tax will be completely saved. If you make a daily savings of Rs 200, then by investing monthly in PPF, you can easily create a fund of about 20 lakh rupees for 15 years. Investors get huge benefits of compounding.
How to make 20 lakh fund from 200
In the post office PPF, investors get the power of compounding. Suppose you save Rs 200 daily, you save Rs 6,000 monthly and invest it in PPF. In this way, your investment becomes Rs 72,000 annually. When your PPF account matures in 15 years, then you will get Rs 19,52,740 lakh. PPF is currently getting 7.1 percent interest annually and if the same interest rates remain till maturity, then it will be easy for you to create a corpus of 20 lakhs. Compounding in PPF is done on an annual basis. It is important to know here that the government changes the interest rates on a quarterly basis in the PPF account.
PPF: Maturity is 15 years
The maturity of PPF account is 15 years. But account holders can apply for extension in blocks of 5-5 years. In this, he also gets the option to continue the contribution or not. The advantage of this is that in the long term, you can make a big fund.
PPF: Benefit of tax exemption in EEE category
In PPF, tax benefits are available under section 80C of the Income Tax Act. In this, deduction of investment up to Rs 1.5 lakh can be taken in the scheme. The interest earned and maturity amount in PPF is also tax free. In this way, investment in PPF comes under EEE category. Loan facility is also available against PPF account. One can apply for the loan after the completion of one year from the end of the year in which the PPF account has been opened and before the completion of 5 years.
PPF: Investment is completely safe
The government sponsors small savings schemes. Therefore, the subscribers get complete protection on investment in this. In this, there is a sovereign guarantee on the interest earned which makes it more secure than the interest earned by the bank. In comparison, only up to Rs 5 lakh is insured on bank deposits by the Deposit Insurance and Credit Guarantee Corporation (DICGC).