Turn Your PPF Investment into ₹80 Lakh and a ₹48,000 Monthly Pension

The Public Provident Fund (PPF) is a reliable savings scheme backed by the Indian government, available through post offices and banks. It’s a favourite among risk-averse investors seeking long-term wealth creation. With its tax-free returns, guaranteed safety, and compounding benefits, PPF stands out as a top choice for securing your financial future.

Why Choose PPF for Long-Term Savings?

• Safety and Steady Growth

PPF combines the safety of government backing with the power of compound interest. Your investments earn an annual interest of 7.1% (as of now), which is compounded yearly, ensuring steady growth.

• Tax-Free Benefits

PPF offers tax advantages under the Exempt-Exempt-Exempt (EEE) category:

• Deposits qualify for tax deductions under Section 80C.
• Interest earned is tax-free.
• The maturity amount is exempt from taxes.

• Flexible Investments

You can invest as little as ₹500 annually, making it accessible to all income groups. The maximum annual deposit is capped at ₹1.5 lakh, encouraging disciplined savings. PPF caters to various investors, including salaried employees, homemakers, and small entrepreneurs.

• Extend Your PPF Account for Long-Term Growth

PPF accounts mature after 15 years but can be extended in 5-year blocks indefinitely. Here’s how it works:

• Without further investments: Interest at 7.1% continues to accrue on the balance. You can withdraw any amount once a year.
• With additional investments: Your corpus grows further with interest compounding, and you can withdraw up to 60% of the total balance annually.

How does the 15+5+5 Formula Work?

This strategy involves investing in PPF for the initial 15 years, followed by 2 extensions of 5 years each. By letting your investment grow for 25 years, you can build substantial wealth.

Example: Wealth Creation Over 25 Years

Initial 15 Years

• Annual Investment: ₹1.5 lakh
• Total Deposits: ₹22.5 lakh
• Corpus After 15 Years: ₹40.68 lakh

First 5-Year Extension (No Additional Investment)

• Interest Earned: ₹16.64 lakh
• Total Corpus After 20 Years: ₹57.32 lakh

Second 5-Year Extension

• Interest Earned: ₹23.45 lakh
• Total Corpus After 25 Years: ₹80.77 lakh

With consistent investments and compounding, your PPF balance grows significantly over 25 years.

Convert PPF Savings into a Monthly Pension

Once your PPF account matures, you can withdraw the annual interest as a pension:

• Corpus After 25 Years: ₹80.77 lakh
• Annual Interest (7.1%): ₹5.73 lakh
• Monthly Pension: ₹47,794

This approach ensures a steady, inflation-resistant income stream of nearly ₹48,000 per month for your retirement years.

By following the PPF 15+5+5 formula, you can combine disciplined savings with compounding growth to achieve financial security and peace of mind in your later years.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.