Post Office Scheme: The post office scheme is very much liked among the middle class. The reason for this is that here your money is completely safe with high returns. Post Office Public Provident Fund (PPF) is also the same scheme.
Post Office Scheme: The post office scheme is very much liked among the middle class. The reason for this is that here your money is completely safe with high returns. Post Office Public Provident Fund (PPF) is also the same scheme. By investing here, you can create a fund of lakhs of rupees in the long term.
Daily investment of Rs 167
By investing in this scheme, your money is completely safe and your money is tax free. For maturity of Rs 16 lakh, you will have to invest Rs 167 per day i.e. Rs 5000 per month. If you deposit Rs 5,000 in your PPF account every month, then on maturity of 15 years, you will be the owner of more than Rs 16 lakh.
Increase time period in blocks of 5-5 years
Actually the lock-in period of PPF account is 15 years. If you want to operate it for more than 15 years, then you have to fill a form for this. On completion of the maturity period of 15 years, you can continue the PPF account with fresh contributions in blocks of 5-5 years. Here we are telling you the calculation of 25 years. For this, you have to carry forward the block account of 5-5 years twice.
Benefits of compounding
If you continue the contribution of 5 thousand rupees a month (Rs 167 per day) from 16th year to 25th year, then on the maturity of 25th year you will get an amount of 41 lakhs. In this scheme with guaranteed returns, investors get tremendous benefit of compounding.
How did 41 lakhs become?
The PPF scheme of the post office is a better scheme for wealth creation in the long run. You invest Rs 5,000 every month in PPF. Accordingly, you have invested Rs 60,000 annually. On increasing the account in blocks of 5-5 years, when it matures in 25 years, you will get Rs 41.23 lakh. In this, you will have an investment of Rs 15 lakh, while there will be a wealth gain of Rs 26.23 lakh.
Interest rates change on a quarterly basis
PPF is currently getting 7.1 percent interest annually. It will be easy for you to create a fund of 41 lakhs. Compounding in PPF is done on an annual basis. In the PPF account, the government changes the interest rates on a quarterly basis. The maturity of PPF account is 15 years. But account holders can apply for extension in blocks of 5-5 years.
This amount is tax free
In PPF, tax benefits are available under section 80C of the Income Tax Act. In this, deduction can be taken for investment up to Rs 1.5 lakh 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.
