July 21, 2024

The first step towards wealth management is accumulating savings. You will find a lot of options for savings accounts; however, look for the ones that guarantee substantial returns risk-free. PPF accounts are one of the most common features which come into the picture. PPF account refers to Public Provident fund account and is meant to invest your valuable capital. If you are a new employee or a responsible parent who wishes to save for the future, then PPF is ideal for you. Calculating the interest rates and returns on your PPF account turns a bit difficult. To make these difficult calculations easy, PPF account calculator can be used. What is a PPF calculator? A Public Provident Fund (PPF) calculator is an online long-term investment tool designed to help investors calculate the potential returns and growth of their investments in a PPF account. It considers various factors such as the contribution amount, interest rate, and investment duration to estimate the maturity amount and the interest earned over a period.  If you are someone who is planning to invest in PPF and not sure how much to invest or how much returns you may get on investing a certain amount, our PPF calculator is here for you.  By using a PPF calculator, you gain a clear understanding of the future value of their PPF investments, make informed financial decisions, and effectively plan their savings. Once you decide the amount you can afford to invest on a regular basis, the calculator considers the tenure to be 15 years and the prevalent interest rate to calculate the returns.  However, ensure that you make your PPF investments before the 5th of the month, or else you will not receive the interest for that month. This is because the PPF interest is calculated on the lowest balance between the close of the 5th day and the last day of every month.  Thus, a PPF contribution made on the 5th of a month will be taken into consideration for interest calcultion and will earn interest for that month, while any PPF contribution made after the 5th of the month will not earn interest and result in a loss of interest for that month.  Why use a PPF calculator? Plan your investments: It helps you visualise how your PPF grows, thus helping you plan your contributions to reach desired financial goals, which could be building a retirement corpus, children’s education, marriage, etc. Compare investment options: You can compare PPF returns with other options, such as bank deposits, helping you make informed financial decisions. Maximise your contributions: It will help you effectively utilise the full Rs.1.5 lakh annual limit by understanding how different contribution frequencies impact returns. Track your progress: You can monitor your PPF’s growth over a period, keeping you motivated enough to remain on track to meet your financial goals. Formula used for calculating PPF A PPF calculator uses a similar formula that’s used for calculating the future of an annuity. Simply put, it calculates the future value of your investment, depending on the annual contribution you make towards the PPF and the prevailing interest rate.  The calculation formula that a PPF calculator uses is as follows: M = P [ ( { (1 + i) ^ n } – 1 ) / i ]  In which: M = Maturity benefit P = Annual installments i = Interest rate n = Number of years The part after the P in the formula is the annuity factor, which when multiplied with the annual contribution, provides the maturity value of the PPF investment.  Illustration: Let’s say, you make annual contributions of Rs 1,00,000 for 15 years and the PPF account interest rate is 7.1%. By using the above-mentioned PPF calculation formula: M= Rs 1,00,000 [({(1+0.071)^15}-1)/i] = Rs 27,12,139 Advantages of using PPF calculator Assists in estimating the interest earned on a specific investment amount  Provides an idea to figure out the maturity period of the investment  The estimation provided is calculated on the total investment done in the current financial year  Aids in tax-saving by providing a clear understanding of the interest earned on the total investment done  Gives accurate results by entering the deposit amount and the deposit type  FAQs How much interest rate can I get on my PPF account? The interest rate is mainly determined by the Central Government periodically. At present, the interest rate is 7.1% per annum.  When is my investment going to mature? In PPF accounts, maturity can be attained after 15 years. After this period, you are liable to withdraw the entire amount.