Skip to main content

Retirement Planning through Public Provident Fund (PPF)

Transact Mutual Fund Online

Download Mutual Fund Application Forms

AT THE start of the new financial year, it is time for the investor to once again take a careful look at the various investment options available and make investment decisions.

Starting investment at the start of financial year will provide the investor with the required time to accumulate the corpus as per the requirement. Here is a look at the situation for the public provident fund (PPF) because there is a change once again in the interest rates offered for the financial year.

Features: The PPF is a long-term investment option, available for every individual, irrespective of whether they are salaried or not. With tenure of 15 years and an option of extension in blocks of five years any number of times, this scheme allows investment for a long term.

Thus, it becomes a route whereby, the investor can accumulate money for a long period of time and can become one of the options used to meet their retirement planning needs.

Since the returns are tax free and the amount compounds in the scheme, it offers significant benefits for those looking to grow their money over a longer time period.

Maximum amount: The maximum amount that can be contributed each financial year into PPF has been raised to Rs 1 lakh from December 2011. In the coming financial year too, the entire amount of Rs 1 lakh can be used by the investor. Many people confuse the situation between the tax benefit and the amount that can be invested. So, for example, if a person has Rs 50,000 of other tax-saving investment, then they will just put the remaining amount of Rs 50,000 available as a deduction under Section 80C into this instrument.

If you are looking just at the tax angle, then this would be an appropriate way to go about things.

However, if you are considering building funds for your retirement, then you might want to make the full use of the amounts that are available under the PPF, even though a part of it might be an extra investment as far as the tax deduction under Section 80C is concerned.

There are a couple of reasons why this kind of higher contribution might be a good idea. The first is that the amount actually compounds under the PPF scheme. So, a higher balance in the account is better for the individual investor over a period of time, especially, in the later years, when there is a large amount of earning from the fund. The second thing is that the returns are tax-free, which means that pre tax returns are significantly higher.


Rate of interest: There has also been a change in the rate of interest in the past four months. Earlier, the rate was 8 per cent, which was raised to 8.6 per cent from December 2011. There has been a further rise in the rates to 8.8 per cent from April 2012. This is a significantly high rate and the individual investor should make the best use of the entire situation. It has to be remembered that the interest is calculated on a monthly basis, though credited to the account once a year. It is calculated on the balance present on the fifth day of every month in the account.
 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

-------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Some of the Top performing Mutual Funds are

  1. HDFC Top 200 Fund
  2. ICICI Prudential Dynamic Plan
  3. DSP BlackRock Top 100 Fund
  4. Birla Sun Life Front Line Equity Fund
  5. Reliance Equity Opportunities Fund
  6. IDFC Premier Equity Fund
  7. SBI Magnum Contra Fund
  8. Sundaram Select Midcap
  9. UTI Dividend Yield Fund

Popular posts from this blog

How to gauge the risk profile of your mutual fund portfolio?

MUTUAL funds are considered to be an investment option for those who do not generally devote a lot of time to monitoring and managing their portfolios. Investors experience both good as well as tough times as far as mutual fund investments are concerned. But while evaluating the portfolio of their equity mutual fund holdings there are a few points that one should check to know about the level of risk that they are facing. Often there are situations where there is a higher risk than what was estimated initially. Here are a few ways to evaluate various risk levels. Individual holding exposure : The portfolio of the equity fund where one has invested or plans to invest needs to be scrutinised to see whether the risk levels are such that could lead to a larger volatility in the holdings. Depending upon this factor and the risk taking ability of the investor the choice about a particular fund as an investment should be made. One key point to watch out is whether there is a large ex...
Read more

Tata Fixed Income Portfolio Fund dividend

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)       Tata Mutual Fund has announced dividend under the dividend option of Tata Fixed Income Portfolio Scheme B2 Plan A-DQ, Tata Fixed Income Portfolio Scheme B2 Reg-DQ and Tata Fixed Income Portfolio Scheme B2 Direct-DQ. The record date has been fixed as August 29, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Onlin...
Read more

NRIs and direct taxes code (DTC)

DTC Proposes To Do Away With Special Provision That Allows NRIs Liberalised Duration Of Stay In Country      THE new direct taxes code could bring a large number of global Indians under the tax net, as it does away with a provision that allowed individuals to escape tax in any country citing double tax avoidance.    The new legislation, introduced in Parliament on Monday, says an individual shall be a resident of India in any financial year if he is in the country for more than 59 days in that year, and has been has been India for more 365 days in four preceding financial years. A number of Indian industrialists including Vedanta's Anil Agarwal and Essar's Ravi Ruia have acquired non-resident status over the years.    The DTC has only attempted to clean up the provision in line with the laws globally. A phrase "being outside India" in the existing income tax law exempted individuals who stay outside the country for six months from paying taxes. This was prone ...
Read more

Stick to Good Fund Manager who Can Multiply Your Investment

A manager may be the difference between the best and worst funds. Here's how you can find the right one    Does a mutual fund manager make a difference to your investment? The answer may not be as easy as you think, since most best-performing mutual funds have moved away from individualistic fund management to process-driven methods, limiting the scope of an individual's role in investment decisions. In fact, many fund managers would speak at length about how the "system" their fund house has in place makes their task of picking stocks easy even though it restricts their freedom. Still, the question is important, especially after recent reports that the Securities and Exchange Board of India ( Sebi ) may ask fund managers to disclose to investors their track record of managing money. Let us take a look at the universe of large-cap funds over the past five years. According to Value Research, an independent mutual fund tracking firm, the topper in the category is DSP...
Read more

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now