PPF: If you are planning to invest in Public Provident Fund (PPF), then investing by April 5 will be beneficial for you. Although the investment limit and lock-in period of PPF remain fixed, the benefit of interest rates depends on when you invest
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PPF: If you are planning to invest in Public Provident Fund (PPF), then investing by 5 April will be beneficial for you. Although the investment limit and lock-in period of PPF remain fixed, the benefit of interest rates depends on when you invest.
PPF interest calculation formula
Interest in PPF account is given on the minimum balance between the 5th of every month and the last day of the month. This means that if you deposit money after the 5th, you will get less interest for that month.
Effect of time: Invest early, earn more
For example, if you deposited Rs 1.5 lakh in your PPF account on April 6 and already had Rs 1 lakh in it, then the interest for the month of April will be available only on Rs 1 lakh, not on Rs 2.5 lakh. On the other hand, if you had deposited the same Rs 1.5 lakh on April 4, then the entire Rs 2.5 lakh would have earned interest for the month of April. In this way, losing interest for one month can lead to a big loss in the long run.
Effect of compound interest
PPF offers 7.1% annual interest rate, which is compounded annually.
If you invest lump-sum every year before April 5, then your entire investment will earn interest for the entire 12 months.
If there is a delay every year, the interest will be reduced, which will affect the final maturity amount.
Investing early will give you higher returns
While the difference may seem small, it can make a huge difference over a period of 15 years or more. So, if you want to invest in PPF in one go, do it before April 5 every financial year. This small strategy can supercharge your long-term returns and give you better financial security.
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