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How to Become a Crorepati with PPF Investment

‘Kaun Banega Crorepati?’ Isn’t that your favourite show on TV?

I’m sure you must be a big fan of this show.

But, it’s not everyone’s cup of tea and most of us can’t get through it. However, there are many other ways that can help you become rich.

What are these options?


Now, that there are various investment options available in the market, this piece of article is all about Public Provident Fund often abbreviated as PPF.

Wish to explore?

Let’s begin:

Making a Crore would be difficult with a moderate monthly investment with no equity exposure.

Guess what can do the trick?

Of course, Public Provident Fund (PPF) can do this trick with the power of compounding.

For this, you need PATIENCE. The longer you wait and stay invested the quicker and the more it grows.

Now, you must be thinking about how much you’d have to wait and stay invested?

Well, the timeframe in order to reach Rs. 1 Crore is dependent on how much you invest monthly and the duration of that investment, which you’re ready to commit. However, you can invest a maximum of Rs. 1.5 Lakh per annum.

This comes down to Long-term Commitment:

PPF is, obviously, a long-term investment option and a lock-in period of 15 years is tagged along with it.

So, you have to make this investment only for long-term purposes like child education, retirement, kids’ marriage. You can even continue this after the completion of mandatory 15 years of lock-in period by summing up to more money.

However, you can do this extension in a block of five years only. Hence, post-extension of the investment term, you’ll have durations of 20, 25, 30, and so on.

How Does the Magic Work?

Well, there are two different way when you reach your ‘being Crorepati’ goal:

Number one: By continuous investment until the financial corpus grows to that 1 Crore. So, if you’ve just begun with your career and wish to commit some money monthly for 35 years, you just have to invest a sum of Rs. 4,585 to become a Crorepati via PPF. However, if you wish to become a Crorepati before that, you’ll have to invest Rs. 6,945 for 30 years at the current rate of interest.

These figures considered the current rate of interest for PPF of 7.9% assuming this rate of interest stays the same for the overall investment tenure.

The quickest and fastest possible timeframe to reach 1 Crore via PPF is 25 years with a monthly investment of Rs. 10,720 on a regular basis. As you can only invest a maximum of Rs. 1.5 Lakh yearly in PPF, the maximum monthly investment amount can be Rs. 12,500 only.

If you’re investing this amount every month, you can get your Rs. 1 Crore in only 23 years. Nevertheless, you can’t withdraw it before 25 years as the extension can take place only in a block of 5 years.

Number two: You can continue making an investment only for 15 years and leave your money with PPF to yield interest and keep growing until it reaches Rs. Crore.

If you invest Rs. 6,270 for 15 years, your funds will grow to Rs. 21.87 Lakh. Here you do not have to make further investment.

Leave the financial corpus with Public Provident Fund for another 20 years. It will grow to Rs. 1 Crore. With Rs. 9,165 as your monthly investment you can become a Crorepati in 30 years. Out of these 30 years, the first 15 years will involve a regular investment, after that you don’t have to make any investment but keep this financial corpus with PPF for another 15 years.

Now the question is:

Why is PPF so Popular?

Well, yes this is a government scheme and this makes it popular. But can you think of any other reason?

Let’s dive into some more reasons behind the popularity of this investment option:

PPF is best-suited for various conservative investors who like fixed-income investment better. This investment product is one of the best and safest debt instruments because of the sovereign backing of our government.

The most important and striking advantage is that the PPF account gives you one of the maximum returns amongst the fixed income instruments. Moreover, it provides you the best tax-saving options.

You can enjoy a tax deduction of up to Rs. 1.5 Lakh under section 80C of the Income Tax Act, 1961.

On top of that, any rate of interest you make on the PPF investment is entirely tax exempted. This feature makes it even more popular debt income product for those who fall in the highest income tax bracket as these individuals get a higher tax-exempt refund. They can even claim deductions on their investment.

Another thing is that you can open a PPF account online with just Rs. 100; however, you have to make an investment of Rs. 500 every fiscal year. The Indian government reviews the rate of interest each quarter depending on the prevailing economic circumstances in the country.

Although PPF is the long-term instrument, it comes handy with liquidity option too. You can borrow or take a loan against your PPF balance after making an investment for three years. Not only this, you can even partially withdraw your money after a span of seven years.

No, no, this doesn’t end here.

You can even open a PPF account in the name of a minor. As you can’t hold an account jointly, you can nominate more than one person and can decide the share in your PPF balance.

Now, that you have got to know so much about PPF and how PPF investment can make you a Crorepati, what are you waiting for? Go and make an investment and make money!

Happy Investing!

Helpful Resources: Online Income Tax Calculator

Written By: PolicyBazaar - Updated: 18 November 2020
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