How Is PPF Interest Calculated?

How Is PPF Interest Calculated?

What is a PPF calculator?

We understand that calculations may not be something we are used to doing. Our PPF calculator offers you an easy method to calculate the amount of PPF you should invest. This is in case you do not know how much to invest or what the return would be on an investment in a particular amount.

Once you have decided how much money you are able to invest regularly, you can use the calculator to calculate the returns based on a 15-year tenure and the current interest rate.

How to Use the PPF Calculator?

We have provided you with a simple step-by-step procedure to use this free calculator to calculate your personal pension fund (PPF). However, if you are new to the use of online calculators, here’s what you need to do:

Step 1: Choosing a frequency of investment will be a drop-down menu under the ‘Frequency of Investment’ field. You can choose to deposit into the PPF account on a monthly, quarterly, half-yearly, or yearly basis. Choose an option from the drop-down menu according to your ability to deposit within a financial year.

Step 1: You will now be able to enter a value of Rs.1.5 lakh in the field labeled ‘Yearly Deposit Amount’, which represents the amount you are planning to deposit over the course of one financial year into your PPF account. This is an upper limit it should be noted that.

Step 3: By default, you are provided with the current interest rate.

Step 4: Place your pointer on the blue circle and drag it to the left or right depending on how long you want to keep the PPF invested. It is recommended to invest for a minimum of 15 years here. Your selection’s numeric value is displayed at the right end of the slide.

Step 5: Based on your inputs and the current interest rate, our calculator automatically calculates the maturity value of your PPF account.

How the PPF Calculator Can Help You?

PPF calculator can be a big help when planning investments because they offer the following benefits:

  • With the calculator, you can find out how the account works and answer all your questions.
  • Investing a certain amount gives you a clear idea of how much you can expect to earn.
  • Calculate how much you must invest until you reach a balance between returns and investment amount.
  • Automating the process eliminates the need for manual calculations, thus reducing the possibility of errors.
  • A tax-planning calculator can help you plan your investments better at the tax-planning stage.
  • The PPF account can be extended over and above the lock-in period, so you may be able to get a sense of how much time you have until you retire and how much wealth you can accrue during that period.

Benefits of PPF

  1. Due to the government’s backing, PPF investments have a low risk factor.
  2. There are a number of options for opening a PPF account, including nationalised banks, public banks, post offices, and private banks.
  3. Even though a PPF is locked in for 15 years, it provides the option to withdraw some money or borrow after 7 years. Compared to bank FDs, a PPF offers better returns.
  4. In the EEE category (exempt-exempt-exempt), PPF deposits fall under the exemption category. Therefore, both the principal invested and interest earned, as well as the proceeds received at maturity, are tax exempt. PPF contributions made by a spouse or child are also tax-exempt.

How is PPF interest calculated?

There is an annual compounding interest rate on PPFs. Here is the formula: F = P[({(1+i)^n}-1)/i]

In this case, F is the maturity proceeds of the PPF, P is the annual installments, n is the number of years, and i is the rate of interest per 100

The maturity proceeds at the end of 15 years would be Rs. 31,17,276 if you pay Rs. 10,00,000 per year towards your PPF investment for 15 years at 7.1%.

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