Public Provident Fund: Why should you invest in a Public PPF account before the fifth of every month?

A public PPF or public provident fund account is cheap, flexible, and available to all Indian residents. Often, you can see that people make bulk investments in their public PPF account at the end of every financial year.

Nevertheless, when is the ideal moment to make investments or deposits into public PPF accounts? Let’s investigate.

What is the ideal time to make a public PPF account investment?

People wishing to invest in PPF should invest their money before the 5th of each month. It is because, if invested before the fifth of the month, you can gain the advantage of interest benefit for even that particular month.

This is because the interest rate earned on the PPF account is 7.1%, and the government decides the interest rate each year.

The amount earned on the interest gets calculated monthly and is later added to your bank accounts on the 31st of March of each year.

Therefore, it is easy to know how small you will receive, and you can use a ppf calculator to determine the same.

Since the interest amount is not calculated yearly but monthly, investing the money before the 5th of each month is recommended.

In case you miss the deadline, you will not be able to avail the interest benefit of that particular month. Hence, investing your money before the 5th of every month will help you maximise your returns.

Let’s use an illustration to assist you in grasping this:

For instance, if you are planning to invest Rs. 1.5 Lakh in your PPF account for this financial year. You decided to invest at the beginning of April, but instead of funding before the 5th of April, you invested on the 10th of April.

In this scenario, you will earn an interest rate of 7.1% (the current year’s interest rate) for 11 months instead of 12 months.

You can use a PPF calculator to calculate your interest and check how much you will miss. If you calculate, you will figure out that instead of Rs. 10,650, you will get Rs. 9,762.50 in interest for the financial year 2023-24. All this is because you missed the deadline of investing your money before the 5th of each month.

Similarly, if you invest on the 1st of March 2023, you will only get Rs. 887.50 as interest-earned income.

Moreover, it will be only given to you for one month as the financial year will end on the 31st of March 2024. Therefore, it is essential to invest money and secure your future.

It is also important to invest at the right time. Hence, investing in the PPF account at the beginning of the financial year before the 5th of the month is advisable. This way, you will earn interest for the entire year.

Why do people make investments at the end of the financial year?

The majority of the population will not be aware of the consequences of investing at the end of the financial year. This is because people often invest to save their tax and claim deductions under section 80C.

But by doing so, you may be showing that you invested Rs. 1.5 lakh as a bulk investment, but you only received interest for a few months.

Using a PPF calculator to check how much you will be making as interest-earned income before investing is always recommended. 

To sum it up

Investing in a PPF account is available to every Indian, including a guardian operating a minor’s account.

It is considered a very secure and guaranteed investment option, but to benefit from the whole year’s interest income, you should invest your money before the 5th of each month. You can invest in PPF with as little as Rs. 500 and a maximum of Rs. 1.5 lakh in a financial year.

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