Individuals ponder for a long time before investing their hard money. People with different interests invest either in equities by keeping the risks in mind or invest in provident funds where no risk is attached and can still get better returns.
Public Provident Fund is one of the safest investment avenues with zero market risk and triple tax benefits. In the PPF, principal amount invested, the interest earned and the maturity amount, all are exempted from tax.
However, benefits under PPF come with a maximum upper limit- one can invest only up to Rs 1.5 lakh per year in the PPF for 15 years. An investment of more than Rs 1.5 lakh per year is not permitted under this instrument.
Since the investment appetite is different for every individual the Public Provident Fund can be a good zero-risk option for those who cannot afford to invest a large amount.
If a person plans to invest Rs 100 per day or Rs 3000 per month for 15 years in the PPF, he/she will get Rs 9,76,370 at the current prevailing rate of interest of 7.1 percent. A slight increase in the investment amount, however, can raise the maturity amount to more than Rs 10 lakhs. Consider the scenario where a person invests Rs 3080 per month for 15 years and receives Rs 10,02,407 at a rate of 7.1%.
Nevertheless, one should always be mindful that PPF interest rate is subject to change and may vary based on quarterly announcements made by the Ministry of Finance. Additionally, it should be noted that the interest on the investment amount is calculated using the lowest amount that was in the account as of the fifth day's closing until the end of that month.
