Public Provident fund(PPF) Scheme

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 Greetings of the day...!

Most of the people are familiar with PPF  investment government scheme but still i found some of the people who doesn't even know about this scheme and benefits of it.

Money Savings plays a crucial role in life, even small amount of savings which gives a huge benefit in long-term with assured returns when you have need in money.Everyone should think about the savings in this generation because we could not withstand the situations when inflation arrives,becomes hard to live for poor communities.So,that's the reason we should mind about all these schemes to survive with future generation.This is viable to the middle class families and to the people who are in below poverty line.

What is PPF?

Public Provident fund (PPF), introduced in India in 1968 with the objective of mobilization of small savings in the form of investment, coupled with a return on it and returns are completely tax free.Therefore,if anyone looking for a smart and safe tax free investment option, PPF scheme will be the best choice.

Mostly it is suitable for salaried employees, monthly wage workers and you can open your PPF account at nationalized banks,public banks,post offices, and certain private banks and we can also open the account by using  net banking of respective bank in online mode.

Eligibility

  • Account can be opened by resident individuals and Individuals behalf of minor of whom he is guardian.
  • There is no age requirement to open PPF account.
  • No joint accounts are allowed.
  • An individual can open only a single PPF account and declare the same thing at the time of account opening.
Features
  • Attractive interest rate of 7.1% that is fully exempt from tax.
  • Good long term investment up-to 15 years and can be extended for a block of 5 years after your maturity.
  • Minimum deposit amount Rs 500/- and Maximum deposit Rs 1,50,000/- in a financial year.
  • If the amount of Rs 500/- not deposited in any financial year , a penalty will be charged upto Rs 50/-
  • You can avail the loan up-to 50% from your PPF account balance after expiry of 5 years,excluding the first financial year.
  • A separate passbook will be issued to the customers.
PPF Calculation

Look into the below example which is calculated on an avg amount of investment i.e., Rs 500/- monthly.


The calculation will be based on the formula:

                                                          F = P[({(1+i)^n}-1)/i]

                                                    Where F = Maturity proceeds of the PPF
                                                                    P = Annual installments
                                                                                n = No.of Years
                                                                                           i = Rate of interest/100


From above equation we can say easily.

                                                           F∝ P

The Maturity amount will be more  when you saves higher amount per month.

I hope this blog is very useful to the readers and kindly post your views comments and corrections if any.

Quote of the day:

 "Small forced savings every month can lead to huge magical returns a decade after"                                                                                                                                                                                           - Nirmal Jain




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