PPF i.e. Public Provident Fund is generally considered a safe and tax-free investment option, but by adopting the right strategy, it can keep you a millionaire even after retirement. The special thing is that if you invest the maturity amount of PPF properly, your fund will not get exhausted even after withdrawing Rs 1 lakh every month. Let us tell you about this plan in detail.
Public Provident Fund (PPF) is a long-term, government-backed investment scheme known for safe returns and tax exemption. It comes under EEE category, that is, there is no tax on investment, interest and maturity. The maximum limit of investment in PPF is Rs 1.5 lakh annually and its lock-in period is 15 years. However, the investor can extend it in blocks of 5-5 years, thereby creating a bigger fund in the long run.
ppf calculator
If an earning person opens a PPF account at the age of 30 and extends his PPF account three times, then the PPF account holder will be able to invest in the PPF account for 30 years. Suppose an investor invests Rs 1.50 lakh every year in his PPF account. After 30 years, the maturity amount of PPF will be Rs 1,54,50,911. Because we are assuming that the average PPF interest rate during the entire period has been 7.10% per annum.
How to use this PPF maturity amount?
After continuing his PPF account for 30 years, the investor will turn 60 and retire from his regular job. In such a situation, the maturity amount of PPF can also be used for regular income. According to experts, the maturity amount of PPF can be used in SWP, which gives annual returns of up to 7% in the long term. Assuming a life expectancy of 80 years, a retiree will need a regular income for the next 20 years. Therefore, any person can invest the maturity amount of PPF in SWP for 20 years and can generate regular income for himself every month.
SWP Calculator
Assuming 7% annual return on SWP over a period of 20 years, if a PPF account holder invests his entire PPF maturity amount of Rs 1,54,50,911 accumulated in the last 30 years, he will get an income of Rs 1 lakh every month for the next 20 years. Interestingly, even after 20 years of withdrawal of Rs 1 lakh, Rs 1,00,05,655 will be left in the investor's SWP portfolio.
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