The Public Provident Fund (PPF) is a government-backed long-term savings scheme available at post offices and authorised banks across India.
The Strategy:
Investors putting in Rs 12,500 monthly (Rs 1.5 lakh annually) for 25 years accumulate a principal of Rs 37.5 lakh. Thanks to compound interest at the current rate, the corpus grows to over Rs 1.03 crore. If the amount remains untouched post-maturity, it continues to earn annual interest — Rs 7.31 lakh, which equates to Rs 60,989 per month. This amount can be withdrawn annually as a steady, tax-free income — similar to a pension — while the corpus remains intact.
Financial planners advise not to withdraw the corpus upon maturity but instead allow it to remain in the account, withdrawing only the interest. This not only safeguards the principal but also ensures a sustainable income stream for life.
Extending the Tenure:
To benefit for 25 years, account holders must formally renew the PPF in 5-year blocks after the 15th year. This renewal must be processed within one year of maturity through the bank or post office. Failure to renew may restrict further contributions.
Current Trends and Data:
The Public Provident Fund (PPF) is a government-backed long-term savings scheme available at post offices and authorised banks across India. By investing Rs 12,500 monthly over a span of 25 years, individuals can build a substantial corpus while enjoying tax benefits and protection from market risks. The strategy hinges on the power of compound interest — allowing the investment to grow uninterrupted and then withdrawing only the annual interest for a stable, lifelong income stream.
If you’re planning for retirement, a PPF account is more than a savings tool — it’s a financial cushion that promises steady, tax-free monthly income without the volatility of stocks or mutual funds. As always, consult a financial planner to tailor the strategy to your goals.
