When it comes to making smart investments, the Public Provident Fund (PPF) is one of the best options out there. It's safe, provides good returns, and comes with tax benefits. Let's dive into why investing in PPF can set you on the path to financial success and what you should do to maximize its benefits.
Why Invest in PPF?
Public Provident Fund (PPF) is a long-term investment scheme backed by the Indian government, offering safety and guaranteed returns. Whether you're looking to secure your future or save for a goal, PPF is a reliable choice. Plus, it offers a competitive interest rate of 7.1%, and your investment grows without the worry of market risks.
But that's not all! Here are three key things to keep in mind to make the most of your PPF and grow your wealth:
1. Withdraw Your Money After Maturity
PPF has a maturity period of 15 years. Once the scheme reaches this point, you can withdraw the full amount along with all the interest earned—completely tax-free! That’s right—any interest you’ve accumulated over the years won’t be taxed, so it’s all yours.
Additionally, you can invest up to ₹1.5 lakh annually, which is eligible for tax exemption under Section 80C of the Income Tax Act. So not only do you get to grow your money, but you also save on taxes each year!
2. Extend Your Investment for Bigger Gains
While PPF matures in 15 years, you don't have to stop there. It's possible to prolong your PPF account for additional 5-year periods. By doing so, your money keeps earning interest, and you can still make withdrawals if needed.
This means even after the initial maturity, you can choose to keep growing your investment without opening a new account. And guess what? You still enjoy the same tax benefits and interest on the extended term!
3. Keep Earning Interest Even Without Additional
Investments
What happens if you don’t withdraw or extend after the maturity period? No worries! Your account will continue to earn interest on the existing balance, even if you stop making further contributions. You won’t need to put in any new money, but your existing balance keeps growing. It's a hands-off way to keep your wealth accumulating.
Why PPF is a Smart Investment
Here are some of the top benefits of investing in PPF:
- Guaranteed Returns: Your money is safe because PPF is a government-backed scheme, and the returns are guaranteed.
- Tax-Free: The interest earned and the maturity amount are tax-free, and investments up to ₹1.5 lakh annually are exempt from tax under Section 80C.
- Long-Term Savings: With a maturity period of 15 years, it helps you build a strong savings habit and accumulate wealth over time.
- Flexible Withdrawals: You can partially withdraw from your PPF account after 5 years if needed, without closing the account.
- Better Than Fixed Deposits (FD): PPF often offers better returns than traditional bank FDs, along with the added benefit of tax savings.
Who Can Open a PPF Account?
- Anyone can open a PPF account, whether you're a salaried employee, a self-employed professional, or even a minor (through a guardian).
- Procedure to Open a PPF Account: You can open a PPF account at any bank or post office. The process is simple and quick.
Documents Required to Open a PPF Account:
To open a PPF account, you’ll need:
- Proof of identity (1. Aadhar Card, 2. PAN Card, and 3. Voter ID)
- Proof of address
- Passport-sized photographs
- A filled account opening form (available at banks or online)
Once your account is open, all you need to do is start depositing a minimum of ₹500 annually to keep it active. You can deposit a maximum of ₹1.5 lakh per year, and the earlier you start, the more your money will grow!
Wrapping Up
Investing in PPF is a great way to ensure your money grows safely and steadily. By taking advantage of its tax benefits and extending the account beyond its initial maturity, you can set yourself on a path toward financial freedom. Whether you're saving for retirement, your child's education, or any long-term goal, PPF can help you get there!
click here to calculate your PPF using this PPF Calculator.
