The special thing is that by adopting the right strategy, you can create a corpus of more than ₹ 1 crore from PPF and earn around ₹ 61,000 every month from interest alone, that too without touching the principal amount. You must be wondering how this is possible, so let us know its formula in simple language.
This strategy starts with disciplined investment. If you invest a maximum of ₹ 1.5 lakh every year in PPF and continue this for 25 years, the magic of compounding can gradually increase your investment to about ₹ 1.03 crore. The lock-in period of PPF is 15 years, but you can extend it in blocks of 5 years each, so that your money keeps growing.
What is the pension formula?
Now understand the real pension formula. When your corpus reaches ₹1.03 crore and you stop making further new investments, you will still continue to earn interest on it. At the rate of 7.1%, interest of about ₹ 7.32 lakh will be received annually on this amount. If it is divided into months, it works out to around ₹ 60,989 i.e. around ₹ 61,000 per month, which means your money remains safe and you also get a stable income every month.
However, one important thing to keep in mind is that withdrawal from PPF can be made only once a year. Therefore, you will have to calculate the annual interest and manage it on a monthly basis.
PPF is an investment which, with patience and discipline, can make you a millionaire and is also a strong support for regular income after retirement. If you want safe and tax-free returns in the long term, then this strategy can prove to be very beneficial for you. (S&C-livemint)