Money Magic: Turn Rs 50 a day into Rs 34 lakh, get 25,000 pension, save income tax too!
Can you save Rs 50 a day? For many of the youth today, who have recently entered into employment, even the daily pocket money may be over Rs 50.
Can you save Rs 50 a day? For many of the youth today, who have recently entered into employment, Rs 50 must not even be their daily pocket money expense. Their daily spends are far higher. Even for those not earning much in terms of monthly salary, saving Rs 50 a day shouldn't be a big challenge. So, if you can save Rs 50/day, the following illustration will make you understand, maybe even surprise, as to how much Rs 50 can grow into
First a few assumptions: You are 25 years old, can afford to save Rs 50/day and open a PPF account with Rs 18000.
At the current rate of 8% interest, which is compounded annually, Rs 50/day or, Rs 18,000 per year can grow up to Rs 3,5 lakh in 35 years. That means, if you start saving Rs 50/per day and invest the annual saving of around Rs 18,000 in PPF account, you will be able to get a lump sum of around Rs 35 lakh at the age of 60, when you will retire. Read more about PPF Account here
Currently, investing Rs 35 lakh in LIC schemes like Jeevan Shanti Plan, will make you eligible for an immediate pension of around Rs 25,000 a month pension for life time. Read more about LIC Jeevan Shanti here
So, you have seen, how even a saving of Rs 50/day can give you much financial security post retirement. Imagine what you can achieve by increasing the amount you can save over the years, and also put the money in other instruments like NPS, equities, FDs etc. Of course, the inflation would be a decisive factor, but you can prepare yourself for the challenge by increasing the amount you invest over the years.
PPF account has a lock-in period of 15 years. However, it can be extended in blocks of 5 years each.
(Note: Online calculator has been used for the article. You should read all details of PPF for clarity before investing. The final amount may vary as per the interest rate, which is revised regularly by the government)
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