PPF Calculator: Want Rs 1 crore by 60? Invest Rs 126 daily - Check full calculation

PPF Calculator: A 20-year-old investor can build a retirement corpus of more than Rs 1 crore through the Public Provident Fund (PPF) by investing Rs 46,000 every year, or around Rs 3,833 a month and about Rs 126 a day.

At the current PPF interest rate of 7.1 per cent per annum, the investment can grow to an estimated Rs 1,00,92,296 by the age of 60.

The calculation assumes the investor starts investing at the age of 20, contributes Rs 46,000 every year for 40 years and the PPF interest rate remains unchanged at 7.1 per cent throughout the investment period.

PPF interest rate

The government currently offers an interest rate of 7.1 per cent per annum on PPF deposits. Interest is calculated every month on the lowest balance between the fifth day and the last day of the month and is credited to the account at the end of each financial year.

PPF also offers tax benefits under Section 80C of the Income Tax Act. The interest earned and the maturity amount are tax-free under the existing tax rules.

How much do you need to invest?

An annual investment of Rs 46,000 is equivalent to around Rs 3,833 a month or about Rs 126 a day. Over 40 years, the total investment comes to Rs 18,40,000.

The annual contribution is well within the current maximum investment limit of Rs 1.5 lakh in a financial year under the PPF scheme.

PPF calculator: Rs 1 crore corpus

The illustration is based on the following assumptions:

• Starting age: 20 years
• Retirement age: 60 years
• Investment period: 40 years
• Annual investment: Rs 46,000
• Monthly investment: Around Rs 3,833
• Daily investment: Around Rs 126
• Interest rate: 7.1 per cent per annum
• Total investment: Rs 18,40,000
• Estimated interest earned: Rs 82,52,296
• Estimated maturity value: Rs 1,00,92,296

Based on these assumptions, the estimated interest earned over 40 years is Rs 82.52 lakh, while the estimated maturity value is Rs 1.01 crore.

How much do you need to invest if you start later?

The required investment increases as the investment period becomes shorter.

Starting at age 25: An investor has 35 years to invest and needs to contribute about Rs 66,500 a year, or around Rs 5,542 a month and Rs 182 a day, to build a corpus of about Rs 1 crore by the age of 60.

Starting at age 30: An investor has 30 years to invest and needs to contribute about Rs 1 lakh a year, or around Rs 8,333 a month and Rs 274 a day, to accumulate a corpus of about Rs 1 crore by the age of 60.

Starting at age 35: An investor has 25 years to invest and needs to contribute about Rs 1.5 lakh a year, or around Rs 12,500 a month and Rs 411 a day, to reach a corpus of about Rs 1 crore by the age of 60. This is the current maximum annual investment limit permitted under the PPF scheme.

Key assumptions

The calculation assumes that the investor contributes the required amount every year without interruption and makes the investment early in the financial year to maximise interest earnings.

It also assumes that the PPF interest rate remains constant at 7.1 per cent throughout the investment period and that no withdrawals are made before maturity.

PPF accounts mature after 15 years and can be extended in blocks of five years with continued contributions. A 40-year investment period requires multiple five-year extensions after the initial maturity.

Any revision in the PPF interest rate by the government during the investment period will change the final maturity amount.

Under these assumptions, investing Rs 46,000 a year from the age of 20 can help an investor accumulate an estimated corpus of Rs 1,00,92,296 by the age of 60. The total investment amounts to Rs 18.40 lakh, while the estimated interest earned is Rs 82.52 lakh.