The Hidden Formula of PPF That Most People Don’t Know
PPF Formula: Did you know that the Public Provident Fund (PPF) has a secret formula known as the 15+5 rule? This strategy can help you secure a monthly income of ₹40,000 if used correctly. In this detailed guide, we will explain how you can maximize your PPF investment and turn it into a safe and tax-free passive income source.
What is the 15+5 Formula in PPF?
PPF is a government-backed investment scheme that comes with tax benefits and risk-free returns. Here’s how the 15+5 strategy works:
- PPF has a maturity period of 15 years.
- After 15 years, you have two options:
- Withdraw the full amount and close the account.
- Extend the account for 5 years (without making new deposits).
- By extending your account every 5 years, your corpus continues to grow, and you can earn a stable income.
How to Get ₹40,000 Monthly Pension with PPF?
Step 1: Invest ₹1.5 Lakh Annually
- To maximize PPF returns, invest ₹1.5 lakh per year (₹12,500 per month) for 15 years.
- This will amount to a total investment of ₹22.5 lakh over 15 years.
Step 2: Extend PPF for 5 More Years
- After 15 years, extend your PPF account for another 5 years.
- No additional investment is required, but your money will continue to earn tax-free interest.
- Due to the power of compounding, your total corpus will reach close to ₹1 crore after 20 years.
Step 3: Withdraw ₹40,000 Per Month
- With an average interest rate of 7% per annum, your corpus will generate an annual interest of around ₹7 lakh.
- You can withdraw ₹40,000 per month while keeping your principal amount intact.
Benefits of PPF Investment
- Risk-Free & Secure – Backed by the Government of India.
- Tax-Free Returns – Interest earned is completely tax-free under Section 80C.
- Emergency Fund Option – Partial withdrawals are allowed after 15 years.
- Flexible Extension – You can extend PPF in 5-year blocks without fresh deposits.
- Long-Term Wealth Creation – Compounding interest helps in building a retirement corpus.
How to Open a PPF Account?
You can open a PPF account at any bank or post office by following these steps:
- Visit your nearest bank/post office.
- Fill out the PPF account opening form.
- Submit necessary documents:
- Aadhaar Card
- PAN Card
- Recent Passport-size Photograph
- Deposit a minimum of ₹500 to activate the account.
- Link your account with net banking for online transactions.
Final Thoughts
If you plan wisely, PPF can be your ticket to a secure retirement with a monthly pension of ₹40,000. The 15+5 formula is a game-changer, helping you grow your money without any risk. Start your PPF investment today and ensure a financially stable future!
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FAQ’s
1. What is the 15+5 formula in PPF?
The 15+5 formula allows you to extend your PPF account for 5 years after the 15-year maturity period, enabling tax-free compounding growth.
2. Can I withdraw money from my PPF account after 15 years?
Yes, after 15 years, you can either withdraw the full amount or extend it in 5-year blocks without fresh deposits.
3. How can I get ₹40,000 monthly from my PPF account?
By investing ₹1.5 lakh annually for 15 years and extending your PPF for 5 more years, the interest earned can provide a ₹40,000 monthly withdrawal.
4. Is PPF a risk-free investment?
Yes, PPF is backed by the Government of India, making it a safe and secure long-term investment with guaranteed returns.
5. Can I open a PPF account online?
Yes, you can open a PPF account online via major banks’ net banking services or offline at post offices and banks.
