In these times of ever-rising prices, it often feels like no amount of money is quite enough. That’s why it’s more important than ever to invest wisely and save consistently for the future. For those who prefer low-risk options, post office savings schemes are a reliable choice. They offer safety, guaranteed returns, and steady income without exposure to market fluctuations.
Even a small monthly saving can grow into a significant fund over time. For instance, if you save Rs 5,000 per month, that’s Rs 60,000 annually, you could build a corpus of Rs 16.27 lakhs in 25 years. Curious how? Let’s break it down.
The scheme in question is the Public Provident Fund (PPF), a long-term savings plan introduced by the Central Government, making it a safe and reliable option for investors. It currently offers an interest rate of 7.1% per annum, compounded annually.
The scheme comes with a lock-in period of 15 years, which can be extended in blocks of five years. Investors can contribute a minimum of Rs 500 and up to a maximum of Rs 1.5 lakh per year. A PPF account can be opened at any post office or nationalised bank. Additionally, the scheme offers a loan facility and allows for partial withdrawals after five years, providing both flexibility and security for long-term savers.
If you invest Rs 60,000 per year for 25 years, your total contribution will be Rs 15 lakh. Thanks to compounding interest, you’ll receive Rs 16.27 lakh at maturity — Rs 1.27 lakh of which is pure interest.
Tax-Free Returns: One of the biggest advantages of the PPF scheme is its tax benefits. Investments up to Rs 1.5 lakh per annum qualify for tax deduction under Section 80C of the Income Tax Act. The interest earned and maturity amount are completely tax-free, meaning your money grows without being taxed at any stage.
Ideal for Risk-Averse Investors: For those who want to invest safely while earning a guaranteed, tax-free return, the PPF is one of the most dependable options available in India today. It’s especially suitable for long-term financial goals like retirement, children’s education, or building an emergency fund.
Important Note: The PPF interest rate is reviewed quarterly by the government and is subject to change. As of now, the rate stands at 7.1% per annum.