We all know that PPF(Public Provident Fund)is a long term savings tool. Central Government revises its interest rates every quarter(3 Months)currently, the interest rate applicable for July-September quarter is 7.1%. It may increase or decrease in the future!
If you have a strong ambition to do retirement planning through PPF, follow these simple steps to earn better returns-
- PPF gives “Compound Interest” That means the interest earned gets reinvested which gets compounded on an annual basis.
So to earn huge returns, invest “lumpsum” at the start of the financial year. Make use of entire 1.5 lakh deductable amount under section 80(c).
If you invests at the beginning of the financial year, the invested amounts gets interest which compounds for the entire financial year.
- Prefer Online Transfer to PPF– Now-a-days banks are offering online funds transfer to PPF a/c from your savings a/c. If you wish to do physical transaction, you may delay your investment and even forget to invest . That small “delay” may cause huge wealth-loss in the long-run. So prefer to do online funds transfer to PPF a/c as it is simple and convenient to do within few minutes.
- Invest before 5th of every month, if you wish to do monthly investments-If you can’t able to invest lumpsum amount at thee beginning of the financial year, do monthly installments that too on or before 5th of every month.
Some assume that their PPF Contributions fetches interest irrespective of the date invested! But this is a myth! PPF contributions will earn interest on or before 5th of every month.
If you invests after 5th, no interest would be calculated as the contribution is done after the due date. So remember to invest before 5th of every month; if you are unable to do lumpsum investments at the beginning of the financial year.
- Keep in mind the EEE Tax Exemption Status– Some investors start investing in PPF with full josh, but years pass-by they slowly looses interest to invest. For those investors do remember PPF is a 15 Year lock-in instrument which inculcate saving habit besides availing tax exemption under section 80(c).
PPF is the only instrument which offers “EEE” Status(Exemption on investment, exemption on interest, exemption on maturity amount). Staying invested in PPF for 15 financial years develop the savings habit as well as availing tax exemption. So don’t neglect PPF.
By following the above steps of-Investing at the beginning of the financial year, Preferring online funds transfer to PPF a/c, investing before 5th of every month, Keeping “EEE” Tax exemption status in mind; you can earn huge corpus through PPF. Try this Once!