The Most Authentic Guide on Personal Finance and Investments


Words of Wisdom : "Money is not the most important thing in the world. Love is. Fortunately, I love money." ~ Jackie Mason

MAKE Rs.2.5 LAKHS EXTRA MONEY (with zero risk)

PPF is, no doubt, the best fixed-income product for safe, guaranteed and tax-free wealth creation. Hence, every investor should invest Rs.1 lakh (max permissible amount) in PPF.

However, PPF has one more - but relatively less known feature - which can be used to enhance your returns by almost Rs.2.5 lakhs. Thats right! You can earn about Rs.2.5 lakhs extra from your PPF. And, of course, with zero risk.

As you would be aware, you get tax deduction u/s 80C if you invest in PPF. There are, of course, many other products such as NSC, Pension, 5-year Bank FD, Insurance etc. which also give you 80C tax benefit.

The crucial difference, however, is that for all others your investment should be out of income chargeable to tax. In other words, you will not get 80C benefit if you invest in any of these products on April 1st (as you wouldn't have earned any income on day 1 of the financial year). But in PPF you can make entire Rs.1 lakh investment on April 1st (which, naturally, will come out of your previous years savings).

So what happens if you invest on April 1st vis-a-vis say on the last day of the financial year i.e. Mar 31st? (By the way, many people make their tax-savings investment during Jan-Mar). If you make your PPF investment on Mar 31st of every year, you will accumulate a corpus of Rs.30.32 lakhs. [This is assuming 8% interest rate vis-a-vis 8.80% present rate of interest. But let us assume that over 15 years the average rate would be 8%.] But if you are smart and instead make your investment on April 1 of each year, you will end up with Rs.32.75 lakhs i.e. a clear-cut Rs.2.43 lakhs extra.

We are still in Jun. So in case you are yet to make your PPF investment, DO IT NOW.  

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