Public Provident Fund (PPF) remains one of the most trusted and secure long-term investment options available to salaried individuals and small investors in India. If you begin investing early in your career — say, from the age of 23 to 28 — the PPF scheme can help you build a retirement corpus of over ₹1 crore, all with zero risk and tax-free returns.
If you’re thinking of how to plan your finances better in your late 20s or early 30s, PPF is the perfect tool to ensure financial stability post-retirement.
What is Public Provident Fund (PPF)?
PPF is a government-backed savings scheme designed for long-term wealth creation with attractive returns and complete safety. The scheme has an initial maturity period of 15 years, but it can be extended indefinitely in 5-year blocks.
Current interest rate: 7.1% p.a. (compounded annually; subject to change)
Maximum yearly deposit: ₹1.5 lakh
Tax benefit: Exempt-Exempt-Exempt (EEE) — contributions, interest earned, and withdrawals are all tax-free.
How to Build ₹1 Crore with PPF — Example Scenario
Suppose you start investing ₹1.5 lakh every year in PPF from age 28 and extend the account twice (after 15 years, two extensions of 5 years each), here’s what happens:
| Time Period | Total Deposit | Total Fund Value |
|---|---|---|
| After 15 years (maturity) | ₹22.5 lakh | ₹40,68,209 |
| After 25 years (with 2 extensions) | ₹37.5 lakh | ₹1.02 crore |
By investing consistently and using the extension benefit, you can comfortably create a retirement fund of ₹1 crore by age 53.
Key Benefits of Extending PPF
✅ Bigger retirement corpus — Extending PPF for 5-year blocks allows your money to compound longer and tax-free.
✅ Tax-free returns — Unlike most other instruments, PPF interest is exempt from tax.
✅ Safe & guaranteed — Backed by the Government of India, no market risk.
✅ Flexible withdrawals after 15 years — You can start partial withdrawals or continue investing.
Generating Regular Income After 25 Years
If after 25 years, your PPF account has a closing balance of ₹1 crore:
You can opt to extend the account further without making new contributions and continue earning tax-free interest on the balance.
At 7.1% interest, ₹1 crore earns ₹7,10,000 annually (₹59,166 per month approx.).
You can withdraw this interest every year to create a steady, tax-free monthly income for your retirement.
Why Start Early?
Time is your biggest ally in compounding.
Even a 5-year early start can add lakhs to your final corpus.
It is ideal for those who get their first job between 23–25 years and can start disciplined investing early.
Conclusion
If you’re looking for the best government-backed, risk-free investment scheme, nothing beats PPF for long-term wealth creation. Start early, contribute regularly, use the extension option wisely — and you can build a ₹1 crore fund before retirement, ensuring financial freedom and peace of mind in your golden years.
Author Profile
- My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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