PPF (Public Provident Fund) is one of the most famous long-term saving options for low-risk investors, thanks to government backing, and assured returns on lump-sum or monthly contributions.
A 15-year lock-in period and also to extend for five years, PPF is a stable retirement savings option. Investors can also extend the tenure multiple times. The best option is to hold the PPF for the long term for the best results.
The deposit rate is a minimum of 7.10 percent every year, which is reviewed by the government every quarter. PPF interest rate is the same from 1st April 2020.
How does PPF work?
One can invest Rs 500 and a maximum of Rs 1.5 lakh per year in their PPF account. This scheme follows the annual compounding rule. This means that investors can earn returns on the interest accumulated over time and also save their investment.
If an individual contributes Rs 5000, Rs 10,000, or Rs 12,000 every month, the final corpus after 15 years, and even if a person extends tenure, will be substantial. The extension of tenure helps investors to continue earning interest on their accumulated balance while making fresh contributions.
Public Provident Fund allows a maximum of 12 times a year or as a lump sum. Interest will be calculated on the lowest balance between the 5th, and it is better to deposit before the 5th.
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