PPF: How To Accumulate Rs 1 Crore Via This Tax-Free Investment Option?

Public Provident Fund or PPF is a great investment option as it offers tax-free returns. It is considered a suitable instrument for diversifying your investment portfolio. The scheme is often preferred by risk-averse investors due to the secured returns.  

Being a government-backed long-term investment scheme, it is a reliable investment option and a good option for retirement due to its 15-year lock-in period. After 15 years, investors also have the option to extend the PPF account in 5-year blocks. This makes it a flexible scheme for long-term financial planning. 

The PPF interest rate is revised by the government on a quarterly basis. Currently, the PPF interest rate stands at 7.1% per annum. While the returns may not seem very attractive compared to other schemes, PPF investments are protected from taxes, making them a secure and tax-efficient option.

Investors can contribute a minimum of Rs 500 to the PPF account and the maximum contribution is capped at Rs 1.5 lakh in a financial year.

At the current rate, if one invests Rs 1.5 lakh annually in their PPF account, they will have a maturity value of Rs 40,68,209 at the end of 15 years, including an interest of more than Rs 18 lakh.

Since PPF accounts can be extended beyond the 15-year lock-in period, investors also have the option to grow their money further, potentially reaching Rs 1 crore, all tax-free. At the current rate, if someone invests Rs 1.5 lakh annually for 20 years in PPF, their investment amount will stand at Rs 30 lakh.

Interest earned during this period: Rs 36,58,288

Maturity value after 20 years: Rs 66,58,288

If investors have the resources and patience to increase their PPF contributions by another 5 years, they will be able to build a corpus fund of Rs 1 crore with an investment of Rs 37 lakh.

Calculations show that a consistent contribution to the PPF scheme up to the maximum limit for a period of 25 years could help you become a crorepati.

Total investment in 25 years: Rs 37,50,000 (At Rs 1.5 lakh per year)

Interest earned: Rs 65,58,015

Maturity value: Rs 1,03,08,015