PPF-Invest early in the financial year to benefit

It is paramount to know when to invest in PPF so as to fetch maximum gains. PPF being one of the most popular Indian savings schemes it overrides many other options because of its distinctive features like tax benefits and guaranteed returns. PPF offers a 7.1% rate of interest and is revised quarterly by the government. This rate is effective till the quarter ending on 30th june.

PPF holds EEE tax benefits. The contribution made towards PPF, interest earned thereon and the cumulative sum received at the end of the maturity, all are exempt from tax. PPF is a worry free investment option. But it is important to know what is the best time to invest?

Usually the investment decisions are made at the end of the year in a rush to claim tax benefits under section 80C.Invest at the beginning of the year in PPF to earn interest on the deposits for the entire year. The tax exemption allowed under section 80C is available upto Rs.1.5 lakh.If the investment is made at the beginning of the year, interest income can be earned throughout the year.

Also understand the importance of contributing towards PPF before the fifth of any month. Because the interest is calculated on the minimum of the monthly balance between the fifth and last day of the month. For an example Mr. X contributes Rs.10,000 on 7th April and his balance in the PPF stands at Rs.1 lakh. He will lose interest on Rs.10,000 as he missed the deadline. Had he deposited on or before 5th April, he could have earned interest on Rs.10,000. Now he will end up earning interest on the balance or Rs.1 lakh.

PPF earns quite lucrative tax benefits as compared to other popular investment instruments like bank FDs etc. Make it more fruitful by investing early,i.e; in the beginning of the financial year to gain maximum interest yields. Irrespective of whether you contribute regularly towards PPF or are going to do it for the first time, decide to invest now so that you can earn interest for the entire year. Also do not miss the fifth of any month to avoid the loss of interest for that particular month. 

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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