By having Public Provident Fund (PPF) Account a Young Person can have more than Thirty Two Million of Rupees after Thirty Five Years i.e., after his Retirement

As far as possible we should save money with strict discipline than what we normally do.  PPF is a way to save and make more tax free and secured savings. We should save money not for sake of it. We should save so that we can afford better and planned future. After retirement, we can then afford to maintain one self and become financially independent. Some after retirement even go for reverse mortgage of their house in which they are living. Not because you want to hoard all your cash, but because you want to use it for good in future. Think about your own retirement.

Suppose that there is an individual who has started his career and his income is such that he needs to save the maximum permissible at present (say one hundred and fifty thousand rupees annually) in order to save income tax on the said amount. One of the avenues for this is to deposit in Public Provident Fund (PPF). In case of PPF, the present rate of interest is 8.7% (this interest is tax free in the hands of the individual) and maximum amount one can deposit in this account is one hundred and fifty thousand rupees annually. One benefit is that the depositor will be saving tax not only on the present income, but also on its proceeds of all the subsequent 15 years, which is also extendable for once or more in a block of 5 years each time. The account holder can retain the account after maturity for any period without making any further deposits too. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.

If the person deposits the entire saving amount of 0.15 million rupees in the beginning of the financial year (say by 5th of April) and continues to do the same every year till say for thirty-five years, then he will be getting (tax-free) amount of about 33 million rupees. Supposing that the individual starts this process at the age twenty-five, he becomes a multi milliner at age of sixty years – which is the retirement age for many corporate employees or self-employed persons. This amount is realistic and remains secure with the Indian Government in either Post Offices or many designated bank branches, if the interest rate remains 8.7% throughout. If the rate of interest increases, this amount would be more.  Mind it one should not draw any amount from the stated corpus. This may be noted that one is only depositing 5.25 million rupees in equal parts annually and is getting more than 32.8663 million rupees after thirty-five years. Thus, by adopting strict discipline in managing the finance, one can be in the upper strata even after one’s retirement.  There are options to have closing or not extending the said account after 15, 20, 25, 30 years as well and then the person would be having Rupees over 4.67, 8.06, 13.21 and 21.01 millions respectively.  Besides the above amount, every year the person is saving Income Tax too on 0.15 million saving under Section 80C of IT Act.