Rising education costs can put a significant burden on parents. However, the Post office Public Provident Fund (PPF) Scheme offers a reliable and secure way to build a large corpus over time. Here’s why this scheme is one of the best options for middle-class families and how small savings can lead to a big fund.
1. What is the PPF Scheme?
The Public Provident Fund (PPF) is a government-backed small savings scheme offered by the Post Office. It is designed for long-term investment and is known for:
- Guaranteed returns
- Tax-free interest
- Safety due to government security
2. Investment Range and Tenure
- Minimum Investment: ₹500 per year
- Maximum Investment: ₹1.5 lakh per year
- Maturity Period: 15 years (can be extended in blocks of 5 years thereafter)
This flexible range allows even small investors to start saving.
3. Interest Rate
- Current interest rate: 7.1% per annum (compounded annually)
- The interest earned is completely tax-free, increasing overall returns.
4. How to Build a ₹15 Lakh Fund?
By making consistent annual investments of ₹1.5 lakh, the maximum allowed, for 15 years at 7.1% interest, parents can accumulate nearly ₹15 lakh on maturity.
- Principal Investment: ₹22.5 lakh (over 15 years)
- Total Corpus (with interest): approx. ₹40.7 lakh
Even with smaller contributions, a sizable amount can be built.
5. Small Daily Savings Can Lead to Big Returns
- Saving just ₹70 per day = ₹2,100 per month = ₹25,200 per year
- After 15 years, with 7.1% annual interest, you can accumulate approx. ₹6.78 lakh
- A substantial amount for college fees, competitive exams, or higher education.
6. Key Benefits of PPF
- Safe & Secure: Backed by the government of India
- Fixed Returns: Not affected by market fluctuations
- Tax-Free: Both interest earned and maturity amount are exempt from income tax
- Loan & Withdrawal Options: Partial withdrawals are allowed after 7 years, and loans can be taken against the balance.
7. Why PPF is Ideal for Children's Future
- Ensures a disciplined savings habit
- Creates a lump sum amount at the right time – when children reach college or higher education
- Provides tax savings under Section 80C
8. How to Open a PPF Account
- Visit any Post office or authorized bank branch
- Provide KYC documents, address proof, and photographs
- Start with a deposit of ₹500 or more
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