In most Indian households, homemakers are the finance managers and in almost all households they are still the kitchen managers. Significantly, in most families, homemakers try to cut corners to save a small amount from the monthly budget that they have, and in many cases, they are remarkably successful. Let’s see what they can accumulate if they are prudent enough to open a Public Provident Fund (PPF) account and put the savings there, what can the account accumulate for them.
The advantage of a PPF account is one can keep stretching the tenure of investment by blocks of 5 years even after the initial maturity period of 15 years. Let’s assume a woman getting married at the age of 25. She manages to save Rs 100 a day, or Rs 36,500 a year. Let her put it in a PPF account. We can use an online PPF calculator to calculate the amount she can generate over 15, 20, 25, 30 and 35 years.
PPF calculator: See the magic of long-term investment
PPF account after 15 years: The lock-in period of a PPF account is 15 years. If we consider a homemaker continuing with the PPF for this minimum period, she can accumulate Rs 9,89,931 – of which Rs 5,47,500 in the principal; and Rs 4,42,431 is the interest.
PPF account after 20 years: The total amount rises to Rs 16,20,183 of which the principal amount is Rs 7,30,000 whereas the interest component is Rs 8,90,183.
PPF account after 25 years: The interest component really takes off now. It stands at Rs 15,95,784 on an investment (principal) of 9,12,500 and the total rises to Rs 25,08,284.
PPF account after 30 years:: The total amount rises to Rs 37,59,722, of which the principal is Rs 10,95,000 and the interest is Rs 26,64,722.
PPF account after 35 years: The PPF account will now generate Rs 55,23,145 – principal is Rs 12,77,500 while the interest will run up to Rs 42,45,645.
Who can open a PPF account
Anyone who is above 18 can open a PPF account with KYC documents such as Aadhaar and PAN. Any homemaker can easily open one. Let’s remember that we have assumed that the interest paid by PPF remains steady at 7.1%. The PPF calculator tells us that is she is disciplined enough to continue investing Rs 100/day, she can generate more than Rs 55 lakh when she turns 60. The entire amount is tax free.
