Search This Blog

Scared of market volatility? Here is how to become crorepati in a safe way through PPF

If you put Rs 1.5 lakh every year in PFF at the beginning of a financial year, then one can accumulate a corpus of Rs 1.08 crore by the end of the 24th year.


New Delhi: The BSE Sensex has corrected over 4,500 points since it made an all-time high of 38,989.65 in the month of August. Worries over rising crude oil, falling rupee and a debt default by some of the group companies of IL&FS has triggered a massive selloff in the market. Although correction in the equity market is a normal phenomenon, the recent sharp correction has spooked many small investors, who have entered the market recently.

Undoubtedly, equity is the best asset to create long-term wealth but those who cannot bear the short-term volatility, they can stick to fixed interest earning instruments like Public Provident Fund (PPF). Along with providing fixed interest every year, PPF also provides tax benefit at various stages. PPF is also considered as one of the safest instrument as it has government backing.
PPF falls under the 'EEE' category, which means that PPF contribution, interest earned on PPF and PPF maturity proceeds are exempted from tax. One can invest up to Rs 1.50 lakh in an EPF account per annum.
PPF investment has become more attractive recently after the government revised interest rate on small savings schemes for the October-December quarter. The interest rate on PPF has been revised from 7.6 per cent to 8 per cent now. It may be noted that the government fixes the interest rate on PPF every quarter.
A PPF account matures in 15 years but one can extend the maturity by a block of 5 years for multiple time by giving an application. 
Meanwhile, in PPF, loan and partial withdrawal benefit are also available. PPF account holders can avail a loan between the third and sixth financial year of opening the PPF account. The maximum amount of loan one can avail on his PPF account is of 25 per cent of the total amount accumulated in the account by the end of the second fiscal year preceding the year in which the loan was applied for. After the completion of the sixth financial year or from the beginning of the seventh financial year, the PPF account holder becomes tax-free partial withdrawals. The maximum partial withdrawal amount is capped at 50 per cent of the account balance at the end of the fourth financial year preceding the year in which withdrawal is made or 50 per cent of the account balance at the end of the previous financial year, whichever is lower. 
With the above benefits, it is worth investing in PPF for the long term, say financial planners. One can also become a crorepati by investing in PPF regularly. If you put Rs 1.5 lakh every year in PFF at the beginning of a financial year, then one can accumulate a corpus of Rs 1.08 crore by the end of the 24th year assuming that 8 per cent interest remain constant throughout the entire 24 years tenure. Here is an illustration that shows one can become a crorepati in 24 years by investing in PPF account.
Source: Times Now News)
If a PPF account holder continues the account for 30 years, then he will be able to accumulate Rs 1.83 crore by the end of 30 years.
Here are few facts About PPF
-Interest rate : 8% (for Oct-Dec 2018)
-Duration of the scheme: 15 years
-Minimum deposit amount (per year):  Rs 500
-Maximum deposit amount (per year) :  Rs 1,50,000
-Number of instalments every year: 1 (min) to 12 (max)
-Number of accounts one can open: Only One
-Lock-in period: 15 years (partial withdrawals can be made from the sixth year)
-Extension of PPF Account:: After the maturity period (15 years), it can be extended by a block of 5 years for multiple times
-Tax savings (contribution) : Under section 80C (up to Rs 1.5 lakh)
-Tax savings (interest earned and final amount): fully exempted from wealth tax 
-Who can open: Resident Indians, 18 years or older, can open PPF account. Parents can also open PPF account in the name of their minor child
Source : https://www.timesnownews.com/
Previous
Next Post »