Public Provident Fund (PPF): How to earn Rs 1 crore on Diwali, even save income tax!

This Diwali, you can earn in lakhs! Surely, you would never believe anyone who said so. And rightly too! Earning in lakhs is not something that can be done in a day, unless you are already super rich. However, even a common man can grow his wealth in lakhs with some planning and disciplined investments. This Diwali you can make a start and take a step that will help you accumulate a substantial lumpsum up to Rs 1 crore over a period of a few years. Moreover, you can also get income tax relief on the invested amount and the interest earned. 

Following is the simplest and safest option you can start with on this Diwali. This purpose of this article is to show that generating wealth is possible and there are ways to do so, even for those who don't want to take any financial risk. 

You can start by investing some amount in a Public Provident Fund (PPF) account on the day of Diwali. PPF account opening and investment procedures can be completed online on the official website of your favourite bank. PPF was started by the National Savings Organization in 1968 to mobilize small savings. State Bank of India's official website says, "The Scheme offers an investment avenue with decent returns coupled with income tax benefits."

An individual can open the PPF account in her/his own name or on behalf of a minor. This means, you can also use this scheme to give a financial gift to your child. The PPF investment has a lock-in period of 15 years. However, you can get loans on behalf of your investment after certain years. 

Calculation: At the rate of interest of 8.1% on PPF investment, you can get more than double your total investment in the 15-year period. Before opening a PPF account on Diwali, first decide the amount you want to invest. It can be anything, starting from Rs 500 but not more than Rs 1.5 lakh. Pick an amount that you can invest every year till the lock-in period ends. Here's how much your investment can grow in 15 years:

Rs 1.5 lakh/year: Rs 46,75,910

Rs 1 lakh/year: Rs 31,17,278

Rs 50000/year: Rs. 15,58,634

Rs 25,000/year: Rs. 7,79,319

Rs 10,000/year: Rs. 3,11,730

Rs 5000/year: Rs. 1,55,867

Rs 1000/year; Rs. 31,173

PPF investment period can be extended for in one or more blocks of 5 years each. So, if you decide to invest up to 25 years, you can even earn over Rs 1 crore by investing just Rs 1,15,000 on every Diwali. If you invest Rs 1,50,000 for 25 years, you may get over Rs. 1,30,00,000.

Nomination facility for PPF investment is allowed in the name of one or more persons. The shares of nominees may also be defined by the subscriber.

The current rate of interest on PPF investment is 8%.

(*Data source: ICICI Bank online PPF calculator).