Interest rate of PPF account and other small saving deposits increased by a government order on 26th March, 2012 and the same will be effective from 01st April, 2012. The interest on PPF account increases from 8.6% to 8.8%. I am sure that you are aware that the interest on PPF account is not taxable and this will be continuing after the introduction of Direct Tax Code also. You can open a PPF account as your retirement saving and at the same time a tax saving instrument.
An investment of Rs. 100000 every year (which is exempted under section 80C of income tax act) in PPF account can make you a multi millionaire or crorepati when you retire. If you start investing in PPF as early as possible say 25 years or 30 years immediately after you get your first salary, you can retire as a crorepati with this investment in PPF account only.
You can invest up to Rs. 100000 every year in PPF account and the PPF account is for 15 years only. But after 15 years you can continue the PPF for another 5 years and can extent again and again for 5 more years every time. If you do so you can reach the target figure of Rs. 1 crore as your retirement saving on the 27th year.
You can stay on in PPF account for another 3 more years to complete the block of 5 years. After completing this 30 years you can withdraw the entire PPF account or can continue for another 5 years.
The following table (PPF calculator) shows you how you can reach your goal, your retirement plan of Rs. 1 crore or more with an investment of Rs. 100000 every year in PPF account. IF you operate PPF account online, it is more convenient for you.
The following PPF calculation (retirement saving calculator) is based with the assumption that you invest Rs. 100000 every year in your PPF account and the PPF interest rate is 8.8% (The new PPF interest which will be come into effect from 01st April, 2012) and there is no interim withdrawal from your retirement plan PPF account and also assumed that the investment is in lump sum in the beginning of each financial year. It is assumed that the PPF interest rate is same for the entire period. This may be changed.
The table shows an investment in PPF account for forty years. But you can stop whenever you feel that you have enough retirement savings. I f you start investing in PPF account at an age of 20 years and your retirement age is 60 years, you can save for the entire forty years. But if your age is 25 years you can save for 35 years only. If you could start investing in PPF only at the age of 30 years your retirement will be after 30 years and this 30 years of investment in PPF is enough to reach you goal of retire savings of Rs. 1 crore.
For PPF Calculation table Read on Page No. 2
Retire with Crores of Money with PPF Investment
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