The Public Provident Fund is what you call PPF. The principle and interest you earn on the Public Provident Fund is guaranteed by the Indian Government. That means your Investment is safe and you earn interest on it. PPF is a chosen investment for a large number of Indians and continues to be so. Wistfully, the interest extended by PPF is reducing since recent years.

In the year 1968, PPF accounts were introduced in India in order to marshal small savings. This was endorsed as a savings and tax saving investment. Any resident Indian can make this investment. Only Non-Resident Indians and Hindu Undivided Families cannot make this investment.

PPF has a mandatory 15-year lock in but the tenure can be extended in blocks of five years. You can open a PPF at a designated post office or a Nationalized Bank. Minimum investment per year is 500 Rs while maximum investment per year is Rs 1.5 Lakh. An individual can possess only a single account unless the second one is for a minor. You can also appoint a nominee for the PPF account.

Let’s view some perks:-

1. Risk-free PPF is backed by the Government of India and the capital is protected and risk-free returns are guaranteed.

2. Exempt, exempt, exempt benefits PPF enjoys EEE benefits. Interest earned and money withdrawn is tax-free.

Depositing your instalment on or before 5^th of each month is a good idea. PPF presently presents an interest of 7.6% on the minimum balance of your account between the fifth day of the month and the last day of the month. Therefore, in order to enjoy maximum interest on your investment, invest on or before 5^th each month. If, however, you deposit instalment after the fifth day of any month, you will lose interest income for that particular month.

Sanjay asks what the benefit is from investing in PPF before the 5^th of the moth in the long run. Sujay says “If you invest before 5^th each month, you gain 2.5 times the monthly investment compared to the one who always invests after 5^th each month. The savings may not be enormous now, but will make a difference in the long run”

Every drop of water counts. Each drop contributes to making the ocean!

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