PPF Interest Rate – Everything You Should Know About
The PPF interest rate is an all-time hot topic in the investment world. The first thing that anyone gets interested in when it comes to PPF is the interest rate. Are you searching for PPF interest rates but can’t find the correct numbers? We have got your back!
In today’s blog, we are going to explore the current PPF rate. In addition, we will also learn some great details about PPF. So, centre all your attention here because we are about to get started. Let’s go!
What is PPF?
PPF, also known as the Public Provident Fund, is an exclusive investment scheme. It’s popular among investors due to its various investor-friendly features and multiple benefits. PPF is an investment scheme for the long term. It’s best for investors who believe in long-term gain and wish to earn high but stable returns.
Keeping the principal investment amount safe is the primary target for people with a PPF account. In the market today, there are countless investment schemes. But there has never been a scheme that offers as safe returns as PPF. Besides, it’s also considered the best investment for people who are new to investing. Let’s talk about the PPF interest rates now.
What are the current PPF interest rates?
PPF interest rates aren’t fixed but are of a changing nature. But despite its nature, it doesn’t change much in the long run. Like in 2020, the PPF interest rate was bouncing between 7-8%. Talking about the interest rate, the current rate is 7.1%, compounded annually. PPF interest rates have been stable at this level since the last quarter of 2020. Its stability is what makes it risk-free.
Now you might wonder, “How come the rate is so stable?” Well, PPF is backed by the Indian government, allowing it to provide 100% risk-free returns. Additionally, the PPF also falls under EEE status. This means that whatever amount you invest, the interest on your investment, and your maturity amount—all of them are free from tax. You don’t have to pay even a single penny of tax on your investments. Its tax-free features are one of the factors that attract investors to this fund.
PPF Maturity, Closing, and Withdrawal Rules
If you are new to PPF, understanding the PPF interest rates is the first step. The second step is learning about maturity rates and certain withdrawal rules. So let’s talk about account maturity first. A PPF account only matures after 15 years, starting from the end of the financial year when the account was opened. Investors get an advantage with the maturity date. They can extend it in blocks of five years after maturity.
Now a common question asked by many beginner investors is, “Can we prematurely close our PPF account and withdraw all the money?” Yes, you can always withdraw your money from PPF before the maturity date. However, we don’t recommend you do that. But there are some exemptions, such as higher education for children, medical treatment, etc., where you can close your PPF account. But you can close it only after the compilation of five years, not before that.
Learn how to make a crore with PPF.
PPF is undoubtedly the best and most secure investment scheme for long-term investors. It’s not just about the tax benefits PPF offers; one can indeed make more than Rs. 1 crore with it. As you might know, the PPF interest rate that the government offers is 7.1%, which is compounded annually. Now let’s assume that this rate of return remains the same for the next 20 years. So, if your yearly deposit is 1.5 lakhs a year, it will be approximately 40 lakhs in the next 15 years.
As mentioned above, investors can extend their PPF account’s maturity date by a bundle of 5 years after the completion of the 15-year maturity period. If you continue to invest 1.5 lakhs per year for another ten years, your PPF balance will reach a whopping 1 crore. So, the total number of years it took you to get to 1 crore is 25 years, with a consistent PPF rate of 7.1%. But the government tends to revise PPF interest rates every few years. Therefore, with an increased interest rate, you can reach your financial goal faster than you can imagine. Besides, PPF is the safest investment option, so you don’t have to worry about any potential risk of loss.
How can you get the most out of your PPF investments?
The biggest goal of every PPF investor is to try and make the most out of their investments. So, let us tell you how to do it. PPF interest rates are calculated monthly. However, it’s credited to your PPF account at the end of the fiscal year. Moreover, the amount of monthly interest is calculated for the days between the fifth and last day.
So, if you want to maximise your returns, invest in PPF before or on the 5th day of every month. If you follow this approach, you will become more interested in the current month’s balance than the previous one. That’s the case with monthly investments. Now many people prefer lump-sum investments as well. This means they make all of their investments for the year at once. If you are one of them, try making your PPF deposits between April 1 and April 5 of the financial year. This will help you maximise the returns on your lump-sum PPF investments.
Conclusion
PPF is a great investment option, especially for beginners. If you believe in long-term gain and want to earn via compounding income, invest in PPF. The current PPF rate is 7.1%, but it has a high chance of increasing in the future. Unlike other investment options, every time is the right time to invest in PPF.
We have tried our best to share every important detail about PPF and PPF interest rates. If you want assistance with any financial-related topic such as PPF, FD, etc., try Piramal Finance. Their team of experienced financial advisors will help you make ideal financial decisions. Visit their official website now for more details!