What is PPF?

The Public Provident Fund (PPF) is a long-term savings and investment scheme established by the Government of India. It is designed to provide small savers with a safe and attractive investment option, combining tax benefits with attractive returns. PPF accounts can be opened at designated post offices and banks, and they have a tenure of 15 years, which can be extended in blocks of 5 years.

Benefits of Public Provident Fund

• Tax Benefits: Contributions to a PPF account are eligible for deductions under Section 80C of the Income Tax Act, up to a maximum of ₹1.5 lakh per year. The interest earned and the maturity amount are also tax-free.
• Safe and Secure: As a government-backed scheme, the PPF offers a high level of safety for the investment.
• Attractive Interest Rate: The interest rate on PPF is determined by the government and is usually higher than that of fixed deposits and savings accounts.
• Loan and Withdrawal Facility: PPF accounts allow partial withdrawals after the 7th year and loans against the balance from the 3rd year.
• Flexible Investment: Investors can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh per year, in up to 12 installments.
• Long-Term Savings: The 15-year lock-in period encourages long-term savings and financial discipline.

Formula with an Example

The PPF interest is compounded annually, and the maturity amount can be calculated using the compound interest formula:
F = P * (((1 + r)^n - 1) / r) * (1 + r)

Where:

• A = Maturity amount
• P= Annual investment
• r= Annual interest rate (decimal)
• n= tenure

Example: Suppose you invest ₹1,50,000 annually in a PPF account at an interest rate of 7.1% for 15 years.

Using the formula, the maturity amount can be calculated as follows:
A=([150000x{[(1+0.071)^15]-1}]/0.01)*(1+0.071)

Let's break it down:
Annual investment P=1,50,000
Annual interest rate r=0.071
Compounded annually n=15 Years

By calculating step-by-step:
A=1,50,000*[(2.797964-1)]/0.071}*(1+0.071)
A=150000*27.121395
A=₹40,68,209

So, after 15 years, the maturity amount would be ₹40,68,209, excluding the interest accumulation every year on previous investments.

Mool Finance Calculator Benefits

• Accurate Projections: Provides precise calculations of the PPF maturity amount based on user inputs.
• User-Friendly Interface: Simplifies the process of calculating PPF returns with an easy-to-use interface.
• Customization Options: Allows users to input different annual deposits, interest rates, and tenures to tailor their investment strategy.
• Scenario Analysis: Enables users to simulate various interest rates to see their impact on the maturity amount.
• Regular Updates: Keeps track of the PPF investment and provides regular updates on its performance.
• Educational Resources: Offers insights and tips on maximizing returns from PPF investments.

Conclusion

Public Provident Fund is an excellent investment option for those seeking a safe, long-term savings plan with tax benefits. The Mool Finance Calculator makes it easier for users to manage and optimize their PPF investments, helping them achieve their financial goals with confidence.