Become a millionaire with PPF! Learn the 'secret' formula to build a corpus of 1 crore and earn a lifetime monthly income of ₹61,500..

For many people in the country, retirement planning isn't about earning high returns, but rather about creating a secure, predictable, and tax-free income stream. This is where the Public Provident Fund (PPF) stands out. With disciplined investments and patience over a long period of time, PPF can help you build a retirement corpus of ₹1 crore and earn approximately ₹61,500 per month from interest, without touching the principal. Let us tell you how.

Why is PPF a preferred retirement tool?
PPF has been one of India's most popular long-term savings schemes for decades. It is government-backed, making it one of the safest investment options. Investors are eligible for tax deductions under Section 80C (under the old tax system). PPF is tax-free upon maturity.

Currently, the interest rate on PPF is 7.1% per annum, and the government reviews the rate quarterly. Nevertheless, PPF has consistently delivered better returns than other fixed-income products.

Over the past few years, PPF rates have gradually declined from the double-digit levels seen in the 1990s and early 2000s, reflecting falling interest rates in the economy. Nevertheless, the effective return of 7.1% – tax-free – remains attractive to conservative investors.

Special Rules of PPF
Minimum Investment: ₹500 per year

Maximum Investment: ₹1.5 lakh per year

Lock-in Period: 15 years

Extensions Allowed: Forever in 5-year blocks

Extensions can be made with or without contributions. After 15 years, you must submit Form H within one year of maturity to continue contributing.

Interest in PPF is calculated monthly (on the lowest balance after the 5th of each month), compounded annually, and credited at the end of the financial year.

How to Build a Fund of ₹1 Crore in PPF
The maximum investment in this scheme is ₹1.5 lakh, so let's assume you invest the entire amount every year at an interest rate of 7.1%.

Investment Details
Annual Investment: Rs 1.5 lakh

Interest Rate: 7.1%

Investment Period: Over 15 years

Corpus Growth
15 years: Rs 40.68 lakh

20 years (first 5-year extension): Rs 66.58 lakh

25 years (second 5-year extension): Rs 1.04 crore

So, to reach Rs 1 crore, you would need to continue investing for 25 years—that is, 10 years after the initial 15-year maturity.

How can you get a monthly pension of Rs 61,500?

Now, suppose after 25 years, you stop contributing and simply keep the corpus invested in PPF.

Total corpus: ₹1.04 crore

Estimated interest rate: 7.1%

Annual interest earned: 7.1% of ₹1.04 crore = ₹7.38 lakh per year

Monthly interest income: ₹7.38 lakh ÷ 12 = ₹61,533 per month

This amount can be considered a monthly pension, while your principal of ₹1.04 crore remains intact.

Why does this strategy work for retirement?

Capital protection: Your principal remains safe.

Regular income potential: Interest can provide a regular cash flow.

Tax-free maturity corpus: No tax burden on the corpus.

The benefit of compounding: The longer you stay invested, the greater the impact.

For conservative investors who don't want to invest in equities near retirement, PPF can serve as a stable income backbone.

Bank vs. Post Office: Where should you open a PPF?
Whether you open a PPF at a bank or a post office, the rules and returns remain the same.

If you want easy online access and prefer digital transactions, choose a bank.

If you live in a rural area and prefer to connect with a physical branch, choose a post office.

The benefits are similar. The decision depends entirely on convenience.

Keep these things in mind before investing:
The annual limit of Rs 1.5 lakh cannot be exceeded.

Long-term discipline is essential – 25 years is a long time.

Interest rates can change over time.

The impact of inflation should also be considered – Rs 61,500 today may not be worth the same in 25 years.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.