How to Calculate Interest on PPF with PPF Calculator Online?

Public Provident Fund Or PPF is counted among the popular investment options to achieve long-term goals. The scheme is designed to help investors build a corpus over the years to meet their financial goals or save money for a comfortable life post-retirement. The best thing about PPF is that it is entitled to tax benefits under Section 80C of the Income Tax Act.

Notably, the rate of interest accompanying PPF is revised by the government of India every quarter and is currently set at 7.1%.

Having an idea of the prevailing PPF rate allows potential investors to determine the estimated maturity amount and proceeds via the provident fund scheme. Individuals can further simplify the entire computation process by simply using a PPF calculator online and planning investment in the long-term option smartly to generate more returns. Typically, a PPF calculator is designed to aid individuals plan their investments and ascertain how much money they would need to meet their financial goals.

That said, let us learn more about PPF calculators and how the tool helps to track the growth of investment and plan finances better.

How To Compute  Public Provident Fund Returns?

A PPF calculator helps determine how much returns an individual would earn on investment at the end of maturity. This helps to estimate whether they would be able to save up enough money to meet their goals.

Typically, a PPF calculator factors in a 15-year tenure and the current rate of interest offered by the scheme to calculate the overall returns.

Did you know the interest on s public provident fund is computed annually?

The maturity amount is determined using –

F = P[({(1+i)^n}-1)/i]

In the formula

• F is the maturity amount via PPF
• P is the annual installment amount
• n is the number of years
• i is the interest rate/100

Example of PPF Calculation

Rafique makes an annual payment of Rs.1,00,000 in his PPF account for 15 years at 7.1%. As per the formula,

M = P * [ (1 + r/n)^ (n*t) – 1] * (n/r)

His maturity returns at the end of tenure would be Rs. 31,17,276.

Rafique can either choose to compute the proceeds on maturity manually using this calculator or use a PPF calculator online. Rest assured, using a PPF calculator will allow him to arrive at the result quicker and within a few seconds.

This might not be the case if he decides to compute manually as the process would be cumbersome and involve multiple steps. Let’s not forget how prone his calculation could be to manual errors which will produce inaccurate results and in turn affect his financial planning.

Steps to Use Public Provident Fund Calculator

An online PPF Calculator is easy to use and comes with a user-friendly interface to facilitate easy navigation and usage.

Above all, the tool requires just the basic investment details to offer a clear insight into the future of the same.

Hence, to determine the interest in PPF and the maturity value of the investment tool individuals need to follow these easy steps:

Step 1: Enter the amount of money you want to park in the PPF investment account.

Step 2: Enter the  tenure for which you wish to stay invested in the scheme

Step 3: Feed the prevailing rate of interest into the calculator

Step 4: Click on ‘Calculate’ button

Once these steps are covered the financial tool will display the maturity value of the PPF. It will also offer a breakdown of the interest accrued on the investment option.

How a PPF Calculator Helps Users?

Using a public provident fund calculator to determine the returns on the investment option came in handy in more than one way.

Here’s how such a financial tool proves useful for users:

• A PPF calculator helps understand how the principal investment amount generates returns over the investment period.
• The tool offers a clear idea about the estimated amount of money investors would receive on the maturity of the PPF scheme
• A PPF calculator is the right tool to determine how one should invest in the scheme to receive desired returns to meet their financial goals.
• The calculator is automated and features an in-built formula that offers quick and error-free results instantly, thus saving time.
• Individuals can use PPF calculators at their tax planning stage to strategize their investments in the best saving plan.
• Individuals have the option to extend the maturity of their PPF account beyond the set lock-in period. They can use the PPF calculator to find out how much returns they can generate and the corpus they can build before their actual retirement.

Before deciding to invest in a PPF it is important to know how one would benefit from the same.

That said, here’s a list of key benefits of public provident fund:

• The risk quotient of investing in public provident funds is low owing to the fact that it is backed by the government of India.
• Opening a PPF account is easy and the service is available at all nationalized and public banks, post offices, and specific private banks.
• For a public provident fund, the lock-in period is 15 years. However, individuals can still withdraw money from their accumulated fund or take out a loan against it after  7 years of holding it.
• The returns on a public provident fund account is considered more attractive than regular fixed deposit schemes.
• Provided funds come under the category of EEE, i.e., exempt-exempt-exempt. This means the principal invested and the interest earned on the investment as well as the maturity amount are exempted from taxation. Similarly, the amount of money deposited in the PPF holder’s spouse or child’s PPF account is exempted from tax.

This is how the PPF calculator proves to be a crucial investment calculator for individuals and helps improve their financial planning. However, to make the most of the investment option individuals should learn about the features and limitations in detail and then strategize their PPF investments accordingly.

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