We all know PPF(Public Provident Fund) is a long term savings product. It’s duration is 15 full financial years where one can avail tax exemption up to 1.5 Lakh under section 80(C).
It falls under EEE(Exemption on investment-Exemption on interest-exemption on maturity value)category. That means, no tax would be levied on the investment, interest and maturity value.
So PPF has became an attractive tool for conservative and risk averse investors.
Earning Huge Corpus on PPF investments–
Though simply investing money in PPF doesn’t ensure huge corpus, to earn compound interest (Interest on interest)one must save/invest “on or before 5th of every month“
That means if you invest after 5th, you won’t be able to earn interest on that investment. Only amount invested before 5th of every month is compounded annually for interest calculation purpose.
The another way to earn huge corpus is–
If you have lumpsum amount and don’t need the money for immediate use, invest lumpsum amount on or before April 5th; The financial year starting which would earn compound interest for the whole financial year.
But if you have little surplus, invest monthly on or before 5th of every month
If you have lumpsum amount, invest the entire amount(up to permissible 1.5 Lakh)on or before 5th april.
Generally, investing lumpsum in the starting of the financial year earns huge corpus as the interest would be calculated for the whole financial year, but if your circumstances don’t permit you to invest lumpsum, invest monthly but before 5th of every month!