The Professionals and Disadvantages of Investing in PPF

0
0
0
0
0
0
0
0
0
or copy the link

Public Provident Fund or PPF as it is popularly recognized is 1 of the most popular investments in India as it offers a safe investing choice and has a decent 8% price of curiosity which is compounded yearly. It is considered the safest investment since it guarantees a secure future lump sum of money. Also,as it falls under Section 80C,it provides traders with tax advantage as nicely. The quantity you get following maturity will not be taxable,so the 8% curiosity price functions out to be greater. Let us presume that your taxable income is Rs. 3 lacs and you commit Rs. fifty,000,your taxable earnings falls to Rs. 2,fifty,000. This turns out to the primary benefit associated with a PPF account.

Previously the price of curiosity was as higher as twelve % but it has been steadily falling because then,so it makes sense to start investing in it as quickly as feasible prior to the interest falls even much more. Also,the money in your PPF account is topic to changes in the interest price in the future, in case the authorities further decides to lower the curiosity price.

As mentioned in my publish on the energy of Compound curiosity,compounding of money is a large as well as stage because a little quantity invested every month can yield a substantial quantity of money on maturity. If the optimum quantity i. e. Rs 70,000 is invested every year at 8% for each annum,it would yield nearly Rs 20 lac after fifteen years i. e. on maturity. Even though successfully only Rs ten,50,000 has been invested over a time period of 15 years,you get much more than double the quantity.

There are particular limitations on the quantity of money you can commit each year in a PPF account. A maximum of Rs. 70,000 can be invested each yr and the minimum restrict is set to Rs. five hundred. Also,the money can be invested in up to 12 investments,with a optimum of 1 investment each month. The investments have to be in multiples of Rs one hundred. Also,there is a lock-in period of 15 years and the account can’t be prematurely closed,except in case of death. partial withdrawals are permitted from the 7th yr onwards. Even though more than one PPF account can be opened for particular purposes or objectives,the total contribution towards each the accounts can’t be much more than Rs. 70,000. Also,the tax benefit does not get doubled. Because the curiosity is calculated on the lowest stability in between the fifth and the last day of the month of march,it is usually much better to deposit the money before March 5.

Thus,the PPF is a secure investing option for these who want their money secured and are not interested in taking dangers by investing in stocks or mutual money.

Visit my website for more posts