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Public Provident Fund: Whenever it comes to investing in government schemes, the name of Public Provident Fund (PPF) definitely comes up. This is one of the popular schemes of the post office. You can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh in this government-guaranteed scheme. The PPF scheme matures in 15 years. Along with this, tax benefits are also available in it.
If you want to save a lot of money for your child's future through long term investment, then this scheme can prove to be a better option. Currently, this scheme is paying interest at the rate of 7.1 percent. If you keep depositing Rs 1000 every month in this scheme in the name of your child, then you can add more than Rs 8 lakh for him. Understand through calculation what you have to do for this.
More than 8 lakhs will be added like this
If you invest Rs 1,000 every month in this scheme, you will invest Rs 12,000 in a year. This scheme will mature after 15 years, but you have to extend it twice in blocks of 5 years each and continue investing for 25 consecutive years. If you invest Rs 1,000 every month for 25 years, you will invest a total of Rs 3,00,000. But at 7.1 per cent interest rate, you will get only Rs 5,24,641 from interest and your maturity amount will be Rs 8,24,641.
This is how expansion will happen with contribution
PPF account extension is done in blocks of 5 years. In case of PPF extension, the investor has two options – first, account extension with contribution and second, account extension without investment. You have to take extension with contribution. For this, you have to submit an application to the bank or post office, wherever you have your account. Keep in mind that you have to submit this application before the completion of 1 year from the date of maturity and fill a form for extension. The form has to be submitted in the same post office / bank branch where the PPF account is opened. If you are unable to submit this form on time, then you will not be able to contribute to the account.
Tax will also be saved in three ways
PPF is an EEE category scheme, so in this scheme you will get tax exemption in three ways. EEE means Exempt Exempt Exempt. In the schemes falling in this category, there is no tax on the amount deposited annually, apart from this, there is no tax on the interest received every year and the entire amount received at the time of maturity is also tax free, that is, tax is saved in investment, interest / return and maturity.
