Thinking of Invest ₹5000 monthly in PPF? Discover how this safe, government-backed scheme can make you a lakhpati with tax-free returns. Check the full calculation!
Invest ₹5000 in PPF? See How This Small Step Can Lead to ₹42 Lakh!
Are you looking for a safe and secure investment plan that gives you guaranteed returns without any market drama? What if this plan also saved you a lot of money on taxes? Well, look no further than the Public Provident Fund (PPF), a fantastic savings scheme backed by the Government of India. It’s a favourite for many because it’s safe, simple, and offers amazing benefits.
Many people think you need a lot of money to start investing, but that’s not true. Even a small, regular investment of just ₹5,000 per month can grow into a huge amount over time. In this article, we’ll break down exactly how your ₹5,000 monthly investment in PPF can turn into lakhs of rupees. Explore the maturity amount after 15, 20, and even 25 years.
What exactly is PPF and why is everyone talking about it?
Invest ₹5000 monthly in PPF: The Public Provident Fund (PPF) is a long-term investment scheme launched by the government to encourage small savings. Think of it as a savings account where you get a much higher interest rate, and the government guarantees the safety of your money. It’s perfect for long-term goals like retirement, your children’s education, or buying a house.
One of the biggest attractions of PPF is its EEE status, which stands for Exempt-Exempt-Exempt. This means:
Exempt: The money you invest (up to ₹1.5 lakh per year) is deductible from your taxable income under Section 80C.
Exempt: The interest you earn every year is completely tax-free.
Exempt: The final maturity amount you receive is also 100% tax-free.
Also Read – 25k Salary but 10 crore reteriment fund.
This triple tax benefit makes PPF an unbeatable investment option compared to many others where your returns are taxed. The current interest rate on PPF is 7.1% per annum, which is compounded annually.
The Magic of Compounding: How Your ₹5000 Grows into a Fortune
Let’s get to the most exciting part – the numbers! We will use a simple calculation to see how your money multiplies. We are assuming a consistent monthly investment of ₹5,000 and the current interest rate of 7.1%.
Your PPF Corpus After 15 Years (The Original Maturity Period)
The standard lock-in period for a PPF account is 15 years.
Monthly Investment: ₹5,000
Annual Investment: ₹60,000
Total Investment over 15 years: ₹9,00,000
Total Interest Earned: ₹7,27,284
Maturity Amount after 15 years: ₹16,27,284
Just by investing regularly, you more than just get your money back; you earn over ₹7 lakh in pure, tax-free interest! This is the power of disciplined saving.
Want More? Extend Your PPF and See the Magic Grow!
Invest ₹5000 monthly in PPF: But what if you don’t need the money right after 15 years? Here’s where the real magic begins. You can extend your PPF account in blocks of 5 years, as many times as you want. Let’s see how much you can accumulate if you stay invested.
Calculation after 20 years (15 years + 5-year extension):
Total Investment over 20 years: ₹12,00,000
Total Interest Earned: ₹14,44,797
Maturity Amount after 20 years: ₹26,44,797
By staying invested for just 5 more years, your interest earned almost doubles! You are now sitting on a corpus of over ₹26 lakh.
Calculation after 25 years (15 years + two 5-year extensions):
Total Investment over 25 years: ₹15,00,000
Total Interest Earned: ₹27,54,567
Maturity Amount after 25 years: ₹42,54,567
This is truly incredible! Your total investment of ₹15 lakh grows to over ₹42 lakh. The interest you earned is almost double the amount you invested. This is because, in the later years, the interest earned each year is huge, thanks to the large accumulated balance.
Key Things to Remember Before You Start Your PPF Journey
While PPF is a fantastic tool, there are a few rules you should know:
Investment Limit: You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh in a financial year.
Lock-in Period: The 15-year lock-in is strict. However, you can take a loan against your PPF balance or make a partial withdrawal after a certain period under specific conditions.
Account Opening: You can easily open a PPF account at any designated post office or bank branch (like SBI, HDFC, ICICI, etc.).
Interest Rate: The government revises the PPF interest rate every quarter. While it is currently 7.1%, it can change over your investment period.
FAQs: Invest ₹5000 monthly in PPF
Q1: Can I invest more than ₹1.5 lakh in PPF in a year?
You can deposit more, but you will not earn any interest on the amount exceeding ₹1.5 lakh, nor will you get any tax benefit on it.
Q2: What happens if I forget to deposit money in a financial year?
Your account will become inactive. To reactivate it, you need to pay a penalty of ₹50 for each year of default, along with the minimum subscription of ₹500 for each of those years.
Q3: Can I withdraw my PPF amount before 15 years?
Premature closure is allowed only under specific circumstances like treatment of life-threatening diseases for self or family, or for higher education, but only after the account has completed five financial years. Partial withdrawals are also allowed after the 6th financial year.
Q4: Is PPF a good option for retirement?
Absolutely! Due to its long-term nature, guaranteed returns, and tax-free status, PPF is one of the safest and most reliable investment options for building a solid retirement fund.
Investing in PPF is a marathon, not a sprint. A small, disciplined monthly investment of ₹5,000 can pave the way for a financially secure and stress-free future. So, if you haven’t started yet, now is the perfect time to open a PPF account and take the first step towards wealth creation.