Public Provident Fund (PPF) strategy: Invest as little as Rs 42 in a month for this big benefit

Public Provident Fund (PPF) is one of the safest and popular savings schemes at present. With the 8 per cent interest, which is compounded annually, PPF also assures a healthy return. A simple calculation would show you that an investment of Rs  1 lakh per annum in the PPF for 15 years can give you a tax-free return of approx Rs 29 lakh if the rate of interest doesn't change over the years. There is a limit on the minimum and maximum amount one can invest in the PPF account. As per the official rules, you need to invest minimum Rs 500 in the PPF account in a financial year, while the maximum investment limit is Rs 1.5 lakh per year. The PPF account comes with a lock-in period of 15 years. However, this can be extended in blocks of 5 years each. This also means you can literally stretch the PPF account for several decades, and enjoy all benefits that come with it. 

One of the biggest benefits of the PPF account is that the invested amount, interest earned and the amount accumulated on maturity don't attract income tax. 

How to make the most of PPF account: 

To make most of the PPF account, you should invest any small amount that you can in a month, instead of keeping the money idle and thinking you don't have enough money to invest. The invested amount in PPF account shouldn't cross the maximum limit of Rs 1.5 lakh per year but as far as the minimum limit is concerned, the PPF account offers a lot of flexibility. 

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The PPF rules say that the minimum amount that can be invested in the PPF account in a financial year is Rs 500. Also, the investment needs to be done once in a year or in maximum 12 instalments. So, suppose, you don't have the minimum amount of Rs 500 in a month, you can invest as little as approx Rs 42 (Rs 500/12) at once in the PPF account. You can invest a bigger amount in the second month. This way, you won't miss making investments in the PPF account in any month. 

Also, you should make the PPF account investment before the fifth of every month to earn interest for the month.

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For example: If you invest Rs 50,000 in the PPF by 5th of April 2019, you will earn the interest of Rs 333 for the whole month as per the current applicable rate of 8% per annum. However, if you invest this amount, say on 7th, you would stand to lose the interest of Rs 333. So, even if you think that you have a very little amount, you should invest it by the fifth day of the month to earn the interest, instead of keeping the money idle with you.