Ask Experts » Finance and Investments » Banking »

What is the smart way to invest in PPF?


Date: 10 Nov 2012   Posted By: Paresh Gujarati     Group: Finance and Investments    Category: Banking   

Hello,
I am working as lecturer and a tax paying citizen of India. I normally choose to invest in PPF account to save the income tax. Some of my friend told me that PPF interest is dependent on the frequency and date of investment. PPF will give us more interest if we invest in PPF monthly instead of at end of financial year in lump sum amount. Do you agree with it? What is the best way to get more interest in PPF investment?


Want to invest in the PPF or Public Provident Fund? Find out how to invest in PPF wisely to get more interest and how PPF can be a great investment instrument.


Author: Vandana    11 Nov 2012      Member Level: Platinum     Points : 6  (Rs 5)    Voting Score: 0

It is true that monthly investments is the best way to go for PPF accounts as then you get interest regularly. It is also advisable to do so to prevent frivolous spending of hard-earned money!

This advice was given to me too and when I was having a full-time job I did put each & every month a small amount without fail. However, once I started part-time work, I found I was not necessarily able to put aside money each month to put in the PPF account. As of today, I put in once or twice a year a lump sum amount after my earnings have accumulated in my bank's savings account. The best time to put such a lump sum is as soon as the financial year ends on March 31st. That is, you should put in the amount between April 1st and April 5th. That way, the amount accumulates interest for the entire forthcoming financial year. If you do have some lump sum later too, then put it before September 30th as this is when the banks have their half-yearly closing day.

Thus, basically for putting a lump sum the best time is as close to the beginning of the financial year as possible. Furthermore, a C.A. told me that the best time to put in any money in a bank account (whether PPF or your salary or any other income) is before the 5th of the month (from 1st to 4th) to get interest.

Keep in mind that once your PPF account matures, you can extend it for a further period of 5 years maximum as informed to me by my Bank.


Author: Ataul Haque    11 Nov 2012      Member Level: Gold     Points : 3  (Rs 2)    Voting Score: 0

PPF or public provident fund is really smart way to save Income tax and also to save a good lump sum amount saved for your future life.
PPF interest though doesn't vary whether you put money in accumulative way or month wise, but the thing is if you deposit money monthly basis then, interest get compounded to some extent for that financial year, when your total amount is actually evaluated.
Thus you get very marginal difference in the interest you get, but those marginal changes also get distinguishable if you have been paying it for either longer duration or if you are paying huge.
So, its better you pay monthly wise.


Author: Bhakti Savla    11 Nov 2012      Member Level: Diamond     Points : 3  (Rs 3)    Voting Score: 0

Public Provident Fund is a safe investment instrument. Tips to invest wisely in PPF are as under:
-Invest in PPF account on a monthly basis from the first month of the financial year.

-Invest more every month during the first few months and keep less amount for investment towards the last few months to earn more interest.

-Make your monthly PPF investment (and other useful investments) from your earnings and then spend from the remaining amount. Avoid making investments from the amount left after your monthly expenditure. This will help you to make smart investments on a monthly basis and you will not make any unwanted purchases.


Author: Anand    17 Nov 2012      Member Level: Gold     Points : 5  (Rs 4)    Voting Score: 0

Before I go ahead in answering you questions, first lets talk about some silent features of Public Provident Fund [PPF] .

The minimum deposit of PPF varies from Rs 500 to Max of Rs 1Lac.

PPF is for long term planning and the money are deposited in the bank for minimum of 15 years. The interest on PPF is fully exempt from tax and the rate of interest will be declared every year and it is generally not flexible in nature.

Generally major banks give loan on PPF amount after a specified number of 5 years.

The person investing in PPF gets the interest annually and the rate of interest is nearly 8.5%, but it depends on banks to banks.

Now coming to your question, the best way of depositing or investing the amount on PPF is during the beginning of financial year from 1st April to 31 March of the next year.

Investing huge amount in PPF account will get more interest rather than investing it monthly and saving them.

Hence my recommendation is to closely watch the savings you make and keep it in your cash box or in your saving bank and during the financial year, withdraw them and invest / deposit them for a year or five years to fetch more interest on PPF.

PPF can be renewed for further 5 years or more based on your original receipt of the earlier amount paid to them.


Author: anily    04 Dec 2012      Member Level: Silver     Points : 3    Voting Score: 0

The person investing in PPF gets the interest annually and the rate of interest is nearly 8.5%, but it depends on banks to banks.Invest more every month during the first few months and keep less amount for investment towards the last few months to earn more interest.Invest more every month during the first few months and keep less amount for investment towards the last few months to earn more interest.PPF can be renewed for further 5 years or more based on your original receipt of the earlier amount paid to them.Make your monthly PPF investment (and other useful investments) from your earnings and then spend from the remaining amount. Avoid making investments from the amount left after your monthly expenditure. This will help you to make smart investments on a monthly basis and you will not make any unwanted purchases.





Author: Ashok Goyal    08 Dec 2012      Member Level: Diamond     Points : 2    Voting Score: 0

PPF is the best investment providing social security for the future. Some of the facts about PPF are given below:

1) Rebate of Rs.100000/- per annum U/s 88 cumulative along with other options u/s 88.
2) PPF account balance can not be attached even by Court Decree.
3) An individual can open one PPF account only. However such individual can open one account each in the name of his/her minor children.
4) Maturity at Current Rates @8.8% will be approx. INR 3.75 lac after 15 years contributions at the rate of INR 1000-00 per month
5) Interest is payable on monthly balances as on 5th of every month.
6) Interest is compounded annually.
7) One withdrawal every FY is permitted after completion of 7 financial years.
8) Minimum Term of 15 years can be extended twice for another terms of 5 years each.
9) GOI can reduce or increase the rates of interest as per PPF Act with minimum rate @ 6.00 p.a and Maximum @ prevailing Bank Rate.





Post Answer



You must Sign In to post a response.


Post Answer        





Related Questions
  • Return to Question Index
  • Ask Question to Experts

  • Awards & Gifts
    Active Members
    TodayLast 7 Daysmore...

    ISC Technologies, Kochi - India. Copyright © All Rights Reserved.