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2 mins Read | 3 Years Ago

Tips to earn maximum interest from your Public Provident Fund account



The PPF is one of the most popular tax-saving schemes used by investors who are looking to reduce their tax burden. A tax-saving tool, PPF is also an excellent choice for building your retirement corpus, which is evident from the attractive PPF interest rates history.

Before we reveal the tips to maximise your PPF returns, let's take a closer look at how PPF interest rates are calculated.

How is the interest rate calculated?

The PPF interest is not fixed but depends on the current yield of government bonds. The interest is compounded annually – meaning the interest you earn is not distributed but reinvested along with your contribution. The interest your contributions earn is credited at the end of the fiscal year. The key point here is that while the interest is credited into your account annually, the interest is calculated every month. The interest is calculated considering your lowest balance in a month, between the 5th and the last day.

The current PPF interest rate for the fourth quarter of 2018, from Jan 2019 to March 2019 is 8.0%.

How to maximise interest earnings on your PPF account?

Tip #1: Invest before the 5th of every month

If you make monthly contributions to your PPF account, then investing before the 5th of every month will help you earn maximum returns, compared to investors who invest after the 5th , as the interest rates are calculated monthly and compounded to your PPF contributions. Thus, by investing before the interest calculation date for a particular month, you maximise your returns.

Tip #2: Invest lump sum amounts at the beginning of the financial year

Another way to maximise your PPF account interest rate is by investing bulk sum amounts at the beginning of the financial year. PPF account interests are calculated from April to March every year. So, by depositing a large sum before the 5th of April, you can earn interest for your one-time deposit for the entire year.

Tip #3: Open a PPF account with a bank that offers online transfer

PPF is a long-term investment plan and to enjoy maximum benefits, you need to stay invested regularly. If you have no other option, but to visit your bank or post office for cash contributions to your PPF Account, then the chances are high that you would skip instalments regularly.

On the other hand, if your bank offers direct Internet Banking transfer facility to your PPF Account, then you are likely to make regular contributions, thereby improving your chances of maximising returns.

ICICI Bank offers direct fund transfer to PPF Accounts for our bank customers.

Use these smart strategies to maximise PPF returns

Remember that when it comes to interest earned, even a few hundreds earned every month can go a long way in maximising your PPF returns, in the long-term. So, make use of these strategies listed here to maximise the interest you earn.

Use a free, online PPF interest rate calculator

If you need further help on finding the accurate interest your contributions earn, then make sure to use a PPF interest calculator. This is a handy tool that helps you predict the interest rates your contributions will earn. This gives you a clear picture of the returns, helping you tweak the contributions to meet your specific requirements.





The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.

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