Public Provident Fund or PPF Calculator

Public Provident Fund or PPF Calculator

Risk-free investments are everyone’s favourite and one of the most popular risk-free investments in India is PPF or Public Provident Fund. In this article, we will discuss the PPF calculator and its features, benefits and other details. We will also discuss the PPF scheme in detail to assist you in your investment decision.

Advantages of using a Public Provident Fund Calculator

So, now you know how the PPF interest calculator works, and the formula that is actually behind the same, let’s see the benefits of using this calculator –

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  This online tool for PPF calculation helps in calculating estimated PPF returns in no time. Once you enter the variables like investment amount, tenure for investment and interest rate (usually fixed as per the current rate of interest on PPF), the calculator will instantly offer you the results. You do not have to wait or check your mail for the results.

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  By using the PPF account calculator, you can understand how much you can save over the tenure you will be investing in the scheme, you can compare with other investment options and take a wise decision. So, it helps in the investment decision-making process as well.

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  If you have a financial goal, and you want to see how much you need to invest in the PPF account for achieving that, you can use the PPF return calculator for determining how much you need to invest in the scheme. This will again help in the financial decision-making process and help you achieve your goals.

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  PPF calculation is quite complex as you can see in the table above. It takes a lot of time and effort to manually calculate the returns for each year and then finally the maturity amount. Thus, with the PPF interest rate calculator you do not have to spend so much time and don’t have to worry about accuracy as well.

Benefits of Investing in the PPF Scheme

While the above points are the benefits of using a PPF calculator, are you aware of the benefits of a PPF account or have you considered why you should open a PPF account? If not then here are some of the reasons you need to know –

PPF Scheme is a risk-free investment scheme offering guaranteed returns. This is a government-backed investment scheme, so you can be assured of your capital investment as well as the returns. However, the interest rate may vary and thus there can be changes in the returns too.

You can open a PPF account in the post office, bank, or private banks, - both online and offline. Thus, you do not have to stand in long queues for PPF account opening, it is completely hassle-free.

You can start withdrawing from your PPF account (up to a certain limit) from the 7thyear into the investment. However, the investment in the amount needs to be continued for 15 years necessarily.

You get tax exemption up to Rs. 1.5 lakhs for your PPF investment in a financial year under section 80C of the Income Tax Act. The investment is tax-exempted, and so is the interest earned and also the maturity amount. It is one of the few investment instruments which falls under the EEE category of tax exemption. EEE stands for Exempt-Exempt-Exempt which means investment, interest and proceeds all are tax exempted.

PPF Investment Schedule

PPF scheme has a lock-in period of 15 years, but here the meaning of lock-in is a little different. So, if you start investing in the PPF scheme, you have to continue the same for at least 15 years which is the minimum tenure. Then you can increase the tenure by five years at a time, as a block of five years and you can do it any number of times. Here is the detailed schedule of the PPF Scheme as per the above example –

PPF Interest Rate

The PPF interest rate depends on the 10-years government bond yield and it is currently 7.1%. The government decides the interest rate on the PPF account. When the interest rate is changed, both existing and new PPF accounts are affected by the change in the rate of interest. In this scenario, you can use the PPF calculator by dividing the tenure when the interest rate was the same. Suppose, the rate changed twice within 15 years, after the 5thyear and after the 11th year. So, you have to calculate the for the first 5 years, then again calculate it for 6 years with the new interest rate and then the last four years with the latest interest rate and then sum up all three results.