3 MinsJan 19, 2023
ThePublic Provident Fund(PPF) is one of the most unique savings products available for consumers today. It is popular for several reasons. It is an extremely secure product and offers guaranteed returns. PPF is completely exempt from taxes. It falls under the Exempt-Exempt-Exempt (EEE) category.
YourPPFcontributions allow a tax deduction of up to ₹ 1.5 lakhs per annum. Funds in your PPF account are compounded annually. Thus, it is beneficial to includePPFin your overall investment and savings portfolio. In this blog, we explain how you can maximise interest on your PPF contribution.
How to calculate interest on PPF?
The government announces the interest rate on PPF for each financial year annually. The current interest rate on PPF contributions is 7.1%. The balance in your PPF account is compounded annually, but it also earns compound interest every month.
The best way to calculate the interest earned on PPF is to use Axis Bank’sPPF calculator. You need to choose the frequency at which you intend to contribute (monthly, quarterly, half-yearly or annually) and the amount you wish to contribute.
ThePPF calculatorwill automatically indicate the principal amount to be contributed, the maturity amount and the overall interest earned.
How to earn maximum interest on PPF?
- Contribute by the 5th of every month
- Contribute up to ₹ 1.5 lakh per annum
- Max out your PPF account by April 5th
The interest is calculated on the minimum balance between the 5th of the month and the last day. Hence, you should contribute by the 5th of every month. If you contribute funds even on the 6th, this amount will not be considered for interest calculation until the next month.
If it hits your PPF account on the 6th, then it will be calculated between the 6th and the end of the month. This means your money could be lying in your account without earning any interest for one whole month, or more.
You can contribute up to ₹ 1.5 lakh per annum to your PPF account. It is ideal to max out yourPPFaccount every year to make the most of this opportunity.
Suppose you contribute ₹1.5 lakhs per annum for 15 years. Consider that the rate of interest is 7.1%. The maturity amount after 15 years will be ₹ 40,68,208.
[Also Read:Five Reasons to Open a PPF Account]
You can make any number of contributions in a financial year. It should total an amount of ₹ 1.5 lakhs. To earn maximum interest, you should contribute the entire amount by the 5th of April. Thus, interest will be calculated on this amount for the next 12 months. This will accelerate the pace of compounding your savings.
You should open up a PPF account, irrespective of whether you already have an employee provident fund account or are self-employed.
You can now open up aPublic Provident Fund accountvia an Axis Bank savings account. It comes with the advantage of mobile and internet banking. This makes it a completely paperless process. It enables easy online contributions. This paves the way for maximising your returns by never missing a payment and earning compound interest annually.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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As an enthusiast and expert in personal finance and investment strategies, my comprehensive understanding of the intricacies of financial instruments positions me well to dissect the nuances of the Public Provident Fund (PPF) discussed in the article "Open an Axis Bank PPF Account Now!"
The Public Provident Fund is indeed a distinctive savings product, renowned for its security, guaranteed returns, and tax benefits falling under the Exempt-Exempt-Exempt (EEE) category. The author rightly emphasizes the tax deduction of up to ₹1.5 lakhs per annum, a crucial aspect that makes PPF an attractive investment avenue.
The article delves into the mechanics of PPF interest calculation, underlining the annual compounding of funds and the monthly accrual of compound interest. What caught my attention is the recommendation to utilize Axis Bank's PPF calculator, showcasing a practical approach to managing one's investments and maximizing returns.
To further elucidate the concept of interest optimization, the article provides actionable advice on contributing by the 5th of every month to ensure the calculation is based on the minimum balance for that month. This attention to detail demonstrates a deep understanding of how interest is computed in PPF accounts.
Moreover, the suggestion to contribute the maximum limit of ₹1.5 lakh annually is a sound financial strategy, emphasizing the importance of capitalizing on the opportunity to maximize returns. The article strategically advises contributing the entire amount by the 5th of April, aligning with the financial year, and accelerating the compounding process.
The introduction of Axis Bank as a facilitator for opening a PPF account adds a practical dimension to the article. The emphasis on mobile and internet banking, a paperless process, and easy online contributions aligns with the contemporary trend of digital finance, making the investment process seamless for individuals.
In conclusion, this article not only showcases a profound understanding of PPF and its intricacies but also provides practical steps for individuals to optimize their investments and maximize returns. The expert advice and attention to detail instill confidence in the reader to consider opening a PPF account, especially through Axis Bank for a streamlined and convenient experience.
