The Public Provident Fund (PPF) is a popular savings scheme in India that provides an opportunity for individuals to earn a substantial amount of money over a period of time. One of the most significant benefits of the PPF is that it allows individuals to earn 1 Cr rupees with a long-term investment. In this article, we will discuss the various aspects of the PPF scheme and how one can earn 1 Cr rupees with it.
What is Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a savings scheme launched by the Indian government in 1968. It is a long-term investment option that offers tax benefits to individuals and helps them save money for their future. The scheme is available to all Indian citizens, including NRIs and PIOs. The money invested in a PPF account earns a fixed interest rate, which is determined by the Indian government every quarter.
How does PPF work?
The PPF scheme works by allowing individuals to invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000 in a financial year. The investment can be made in small instalments, and the money invested in the PPF account earns interest at a fixed rate. The interest earned is tax-free, and the money invested in the PPF account is eligible for tax deductions under Section 80C of the Income Tax Act.
The tenure of the PPF scheme is 15 years, and the account can be extended for a further period of 5 years. The interest earned on the PPF account is compounded annually, which means that the interest earned on the principal amount is added to the principal, and the new interest is calculated on the increased principal amount.
How to earn 1 Cr with PPF?
Earning 1 Cr rupees with the PPF scheme is possible with a long-term investment strategy and regular instalments. The following are the steps to earn 1 Cr rupees with PPF:
- Start early: The earlier you start investing in the PPF scheme, the more time your money has to grow. Starting early also allows you to make small investments that can accumulate over time.
- Invest regularly: Investing regularly in the PPF scheme is crucial to earning 1 Cr rupees. This can be done by investing small amounts every month or by making a lump sum investment at the beginning of the financial year.
- Invest the maximum amount: To earn 1 Cr rupees with the PPF scheme, it is essential to invest the maximum amount allowed, which is Rs. 1,50,000 per financial year.
- Invest for the maximum tenure: The PPF scheme has a tenure of 15 years, which can be extended for a further period of 5 years. Investing for the maximum tenure of 20 years will allow your money to grow and earn the maximum interest.
- Use the power of compounding: The PPF scheme offers compounding of interest annually, which means that the interest earned on the principal amount is added to the principal, and the new interest is calculated on the increased principal amount. This allows your money to grow exponentially over time.
- Keep reinvesting: At the end of the 15-year period, the account can be extended for a further period of 5 years. Keep reinvesting your money to make the most of the compounding effect.
The above steps, if followed carefully, can help you earn 1 Cr rupees with the PPF scheme. However, it’s important to note that the interest rate on PPF is subject to change and it also depends on the investment period.