Retirement Special Scheme: A Public Provident Fund (PPF) might be rather helpful for you if you are seeking a technique to generate a safe and certain income. Investing in it would help you to plan a consistent monthly income of Rs 60,000 upon retirement. Even seasoned professionals would not be able to teach you this approach. Learn here how this would go.
How effective will this Jugaad be?
In a year, your maximum PPF deposit is Rs 1.5 lakh. This plan now pays 7.1% interest, and compounding causes that interest to rise. PPF has a 15-year maturity time, but you must extend it twice in blocks of five years each and keep making investments. You must keep spending Rs 1.5 lakh on it for 25 years.
Fifteen years will see the accumulation of Rs 1 crore.
Your whole investment will be Rs 37,50,000, and you will get an interest rate of Rs 65,58,015 at 7.1 percent when you invest Rs 1.5 lakh a year in PPF for 25 years. Your PPF account will thus show a total of Rs 1,030,815.
Please make sure you are clear on what needs to be accomplished at this moment.
Even after 25 years, you are not required to withdraw funds from the account. If you choose this option, your PPF account will continue to earn interest on any deposits you make. Under such circumstances, you may remove the whole balance from this account once a year or anytime.
You will set up your revenue of Rs 60,000 this way.
Should you maintain the whole Rs 1,03,08,015 in the account, at 7.1% you would generate Rs 7,31,869 as interest. You can only take out the annual interest value. Divided into 12 months, Rs 731,869 will come out to be Rs 60,989. You can thus prepare Rs 60,989 every month. Your account will also remain with a fund of Rs 1,030,815.
Remember this with reference to the extension.
Let us inform you that you will have to apply to the bank or post office where you hold the PPF account if you wish to prolong it with contributions in blocks of five years apiece. You must apply one year before the date of maturity ends. Give this particular attention so that you may continue contributing to PPF for 25 years.
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