If you understand this investment strategy, you will become a millionaire through this government scheme, income tax will also be saved in 3 ways.
If you want to invest for a long time with a safe investment option, then the government guaranteed Public Provident Fund Scheme can be useful for you. It can also make you a millionaire, but for this you will have to understand the investment strategy. Know about it here-
Public Provident Fund is a government guaranteed scheme. It is popular because through it, a good amount of funds are deposited in the long term, also this scheme comes in the EEE category, hence the investor gets 3 types of tax benefits. If you want to invest for a long time with a safe investment option, then this scheme can be useful for you. A minimum of Rs 500 to a maximum of Rs 1,50,000 can be deposited annually in PPF.
At present, interest is being given on it at the rate of 7.1%. If you want, you can also make yourself a millionaire through this scheme, but for this you will have to get the PPF account extended twice. For this, it is very important for you to understand the extension rule of PPF. Know here the method of becoming a millionaire through PPF and the rules of extension.
This is how you will become a millionaire
If you want to become a millionaire through PPF, then you will have to invest Rs 1.5 lakh every year in it. If we look at it monthly, the monthly investment will be Rs 12,500. In today's time, it is not very difficult to withdraw this much amount for investment. If your salary is around 75,000 to 80,000 then you can do this work very easily. You can also save your income tax. The PPF scheme matures in 15 years, but after maturity, you will have to extend the scheme twice in a block of 5 years by continuing the contribution. In this way you will have to continue the investment of Rs 1,50,000 annually for 25 years.
Understand the calculation of becoming a millionaire
If you continue investing in this scheme continuously for 25 years, then in 25 years you will invest Rs 37,50,000, but you will get Rs 65,58,015 as 7.1 percent interest. In this way, after 25 years including the invested amount and interest amount, you will get Rs 1,03,08,015 from PPF. In this way you will be a millionaire in 25 years. Along with the job, if you invest in this scheme by adopting this strategy, then you will add a good amount of fund for old age.
Tax will be saved in three ways
PPF is an EEE category scheme, so you will get 3 types of tax exemption in this scheme. EEE means Exempt Exempt Exempt. In the schemes falling in this category, there is no tax on the amount deposited annually, apart from this, the interest earned every year is not taxed and the entire amount received at the time of maturity is also tax free i.e. investment, interest/return and Tax is saved in all three maturities.
Now understand how the extension will happen
PPF account extension is done in blocks of 5 years. In case of PPF extension, the investor has two types of options – first, account extension with contribution and second, account extension without investment. You have to get extension with contribution. For this, you will have to submit an application to the bank or post office where you have an account. Keep in mind that you will have to give this application before completion of 1 year from the date of maturity and a form will have to be filled for extension. The form will be submitted in the same post office/bank branch where the PPF account has been opened. If you are not able to submit this form on time, you will not be able to contribute to your account.
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