PPF: Did you invest in PPF? Every year in early April it is pointed out that the entire RS 1.5 Lakh should be invested in the public providers Fund (PPF) between the 1st and 5th April 5th. This advice is not wrong. Let us understand why this is said
PPF: Did you invest in PPF? Every year in early April it is recommended that the entire RS 1.5 Lakh should be invested in the public pension fund (PPF) between April 1 and 5. This advice is not wrong. Let us understand why this is said.
How is interest calculated in PPF?
Interest is only paid for the amount paid in the PPF account between the 1st and 5th of each month. This means that if you make money by April 5, you will receive interest for this money for the entire month. However, if you submit after April 5, you will receive fewer interest for this month. Let us understand this with an example.
If you insert 1.5 LAKH 1.5 LAKH between the 1st and 5th April
Assuming that on April 1, 2023 you deposited RS 3.5 LAKH in your PPF account. Now you have deposited another RS 1.5 LAKH on April 3, which made your total amount RS 5 Lakh.
Now the interest in April is calculated so
(7.1%/12) × 5 Lakh = RS 2.958
If you insert RS 1.5 Lakh after April 5th
Let’s assume that you deposited RS 1.5 Lakh on April 9th. In this case, the remaining amount from April 1 to April 8 is 3.5 lakh and from April 9th to 30th the remaining amount is 5 LAKH.
Now the interest is calculated in this way
(7.1%/12) × 3.5 LAKH = RS 2.071
How much difference does it make?
You can see that if you hire money after April 5, you will receive RS 887 fewer interest. Although this is not a big difference, it can gradually increase in the long run.
Is it necessary to invest between April 1 and 5?
If you have a full RS 1.5 Lakh, enter it between April 1 and 5 so that you will receive more interest. However, if you cannot deposit until April 5 for some reason, you don’t have to worry. You can make money whenever you want. If it is difficult to submit RS 1.5 LAKH at the same time, it is also a good option to take RS 12,500 RS every month. Investing in PPF between April 1 and 5 is definitely advantageous, but not mandatory. If you have money, invest soon. But if not, even if you submit later, you will receive good returns in the long term.
