PPF Golden Era: THESE investors turned Rs 1 lakh annual investment to Rs 37 lakh in 14 years!

financialexpress.com:

The Public Provident Fund (PPF), a government-backed investment-cum-tax-saving instrument, was launched in 1968. The scheme was started with a motive of mobilizing small-time savings and providing reasonable returns to investors along with tax benefits. Investing in PPF helps individuals build a good retirement corpus thanks to compounded returns on their deposits.

PPF from investment to withdrawal enjoys the EEE (exempt, exempt, exempt) status. It means the amount invested every year, the interest earned on that corpus and the maturity amount are fully tax-exempt. However, the maximum amount that can be invested in a PPF account is Rs 1.5 lakh lump sum or Rs 12,500 per month, which gets deduction benefit under Section 80C of the Income Tax Act.

One can start a PPF account with a minimum investment of Rs 500 a month for a minimum tenure of 15 years. This can be further extended in blocks of 5 years.

Also read: Fixed Deposits: Which banks are offering best interest rates on FDs in May 2024?

PPF rate, which currently stands at 7.1%, is reviewed every three months by the government. The PPF rate has come down considerably over the years, keeping in view that once the public provident fund was giving an annual interest rate of 12%. Surprisingly, this 12% rate was not for any single year, rather it stayed at that level for a long 14 years from 1986-87 to 1999-2000. With this kind of return, an investment of Rs 1 lakh in a year would have turned to Rs 37 lakh after 14 years, outperforming many popular investment tools during that era.

During this period, gold investment earned a paltry return of around 4% but equity outperformed the PPF return with nearly 16% annual growth in Sensex.

 – PPF can be started with a minimum