How to earn Rs 65.58 lakh, Rs 1.10 cr, and Rs 1.74 cr from interest in this Post Office scheme

PPF Investment: Some returns may appear appealing, but they may loose their sheen after the investor pay their income tax. So, a lot of investors think of post tax return when they invest in an investment scheme. But if somebody tells you about a post office guaranteed return investment scheme, where not only deposits are tax free, but interest earned and the withdrawals are also tax exempted. Such investment is Public Provident Fund (PPF). The scheme comes under the Exempt-exempt-exempt (E-E-E) category, where deposits, interest earned, and withdrawals under the scheme are tax exempt.

Deposits in PPF up to the limit of Rs 1.50 lakh are tax fee. One can open a PPF account in a post office or in a bank.

Post office provides 7.1 per cent annual interest compounded yearly.

One can open the PPF account with a minimum Rs 500 and the maximum Rs 1.50 lakh in a financial year.

The post office scheme comes up with a lock-in period of 15 years, where one can extends the account indefinitely for further blocks of five years.

One can build a corpus of over Rs 2.25 crore in the scheme, of which the investment will be Rs 52.50 lakh, while over Rs 1.74 crore will come only through interest.

Know calculations in this write-up, but before that, know more about the PPF scheme.

PPF: Who can invest in PPF?

Any citizen of the country can invest in PPF.

It can be opened in post office or any bank.

A minimum of Rs 500 and a maximum of Rs 1,50,000 can be invested every financial year.

There is no facility to open a joint account under the PPF scheme.

However, an account holder can make a nominee.

There is no option to open a PPF account even in the name of Hindu Undivided Family (HUF).

In case of children, the name of the guardian is included in the PPF account.

But, it remains valid only till the child attains the age of 18.

PPF: How will PPF make a crorepati?

Though PPF is considered a small savings scheme, where the purpose is not to become a crorepati, but to earn decent returns on small investments.

But since, it provides guaranteed return and there are least chances of income loss, one can become a crorepati by investing the full PPF investment limit in the long run.

E.g. one can start investing in PPF at the age of 25 with a Rs 1.50 lakh investment in a financial year.

They have to continue investing Rs 1.50 lakh a year for the next 15 years.

Since the scheme provides compound interest, after the lock-in period of 15 years, one will have Rs 40,68,209 in their account.

Of these, the total deposit amount will be Rs 22,50,000 and Rs 18,18,209 will be earned only from interest.

PPF: Investment will increase after maturity

Since you had started investing at 25 years and age and invested for a full 15-year period, your age must be 40.

What you have to do now is to take another extension of five years and keep investing Rs 1.50 lakh a financial year during that period.

After five years, the total maturity amount will be Rs 66,58,288.

The investment in this will be Rs 30,00,000 and the interest income will be Rs 36,58,288.

You will be 45 by then.

PPF: What will it take to become a crorepati?

The goal of becoming a crorepati will now be accomplished.

You have to extend your PPF account for another five years i.e. up to 25 years.

You will have to invest Rs 1,50,000 annually for the next five years.

At the age of 50, your total corpus will be Rs 1,03,08,014, of which the investment amount will be Rs 37,50,000 and the interest will reach Rs 65,58,015. 

PPF: Earning from interest alone will cross Rs 1 crore

For that, you have to extend it for another five year and keep investing Rs 1.50 lakh in a financial year.

At the age of 55, you will have Rs 1 crore 54 lakh 50 thousand 910 in your corpus.

The investment in this will be only Rs 45,00,000, and the interest income will be Rs 1,09,50,911.

PPF: Corpus will cross Rs 2.25 crore in 35 years

If you want to retire at 60, have resources to invest and needs a larger corpus by that time, you can invest Rs 1.50 in a financial year for the next five years.

After 35 years of investment, your deposited amount will be Rs 52,50,000, while your total corpus will be Rs 2 crore 26 lakh 97 thousand 857.

If you have invested in it for retirement, then PPF will have to be increased once again for the last 5 years.

Meaning overall the investment will continue for 35 years.

In this case, maturity will be at the age of 60.

In this case, the total amount of deposit in PPF account will be Rs 2 crore 26 lakh 97 thousand 857, of which the total investment in this will be Rs 52,50,000, while the interest income will be Rs 1 crore 74 lakh 47 thousand 857.

PPF: If you want to double your money then invest like this

When you retire at the age of 60, there will be no tax on the huge amount of above Rs 2 crore deposited in PPF.

Generally, if you earn such a huge amount from somewhere else, you will have to pay heavy tax on it.

If both husband and wife operate PPF account together for 35 years, then the total balance of both will be Rs 4 crore 53 lakh 95 thousand 714.