Sage-Tips

What is the IRR of PPF?

Maturity Value 10,000 and the PPF interest rate is 7.1\% per annum (current PPF interest rate for Q1 of FY 2021-22 is 7.1\%). The above example shows the power of compounding when investing in PPF – your maturity amount increases from Rs. 2.9 lakh to Rs. 12 lakh just by investing Rs.

How is IRR calculated for a fund?

It is calculated by taking the difference between the current or expected future value and the original beginning value, divided by the original value and multiplied by 100.

Should I invest monthly or yearly in PPF?

It is always advisable to invest in the PPF at the beginning of the year. This way you will be earning interest on the deposits for the entire year. Most of the time people make bulk investments in their PPF account at the end of the financial year in the month of March to claim deduction under Section 80C.

What are the tax benefits of investing in PPF?

An interest rate on other investments like fixed deposit is also cut down. Due to the tax benefit, PPF is still considered one of the main tax saving investment plans for investment portfolio. Investment up to Rs 1,50,000 every year is allowed for tax deduction under section 80C.

What is the current rate of PPF returns?

PPF returns are fixed by the Central Government. They are set every quarter according to prevailing interest rates on government bonds. This system was introduced in FY 2016-17. The interest rate for Q2 (July-September) FY 2021-22 has been fixed at 7.1\% and the interest rate for Q1 (April to June 2021) was also the same.

What is the current PPF rate in SBI?

You can get an idea of historical PPF rates in the table below: Most bank FDs provide a slightly lower rate of return than the current PPF rate of 7.1\%. The highest FD rate in SBI Bank is 5.40\% (for a tenure of 5-10 years).

When is the best time to invest in PPF?

Invest this amount before 5th April to get the full interest for all 12 months of the financial year. Do not delay your investment till the end of the year, this will only reduce your PPF return. PPF Returns will after 20 years give you the compounded value as per the average interest rate declared in the 20 year period.