A PPF calculator is a financial tool that helps you estimate the maturity amount and returns on your investments in a Public Provident Fund (PPF) account. You input details such as the amount you plan to invest, the duration of investment, and the interest rate, and the calculator computes the future value of your investment. It helps you plan your savings and financial goals by providing insights into your PPF investments.
The interest on a Public Provident Fund(PPF) account is calculated using the formula for compound interest. Here's how it works:
The formula for compound interest is:
F = P [({(1+i) ^n}-1)/i]
Where:
i : Rate of interest
F: Maturity value
N: Total number of compounding periods(usually years).
P: Annual instalments
Suppose you start a PPF account where you deposit Rs. 10,000 annually for 15 years. The annual interest rate is 7.5%.We want to find out the total amount in the PPF account at the end of 15 years.
P=Rs.10, 000 (annual instalments)
i=7.5% (annual interest rate)
N=15 (total number of years)
Using the formula:
F = P [({(1+i) ^n}-1)/i]
F = 10,000 * [({(1+ 0.075) ^15}-1)/ 0.075] = ₹393,200.
Calculating the expression within the brackets first:
{(1+ 0.075)^15} = 3.949
[3.949-1/0.075]= 39.32
Now, substituting it back into the formula:
F= 10,000* 39.32
F= Rs.393,200
So, the total amount in your PPF account at the end of 15 years would be Rs. 393,200.
There are various advantages to using a PPF calculator by Swastika
1. Safety and Security: PPF is a government-backed savings scheme, offering a high level of safety and security for your investment.
2. Easy Access: You can open a PPF account at nationalized banks, public banks, post offices, and certain private banks, which are easily found almost everywhere.
3. Emergency Fund: While PPF has a lock-in period, partial withdrawals are permitted after the 7th year, making it a suitable option for building an emergency fund while earning attractive returns.
4. Tax Benefits: PPF deposits fall under EEE(exempt-exempt-exempt) category, which means, you don't have to pay tax on the money you put in, the interest you earn, or the money you get back when it matures. This helps you save a lot on taxes. Additionally, any deposits made in your spouse's or child's PPF account are also tax-free.
5. Helps you save time: A PPF calculator saves time by giving you quick results without the need for manual calculations.
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