A PPF account is one of the most popular schemes that generate a passive income for you in the long run. It’s essentially a long-term savings cum investment account where you will get an interest based on your deposited amount.
The amount of interest directly depends on the deposited amount. This interest will be credited to your account on top of your deposited money. PPF stands for Public Provident Fund scheme. Using a PPF calculator to determine the interest you will receive will save a lot of time compared to doing it manually.
While this is a good use of the PPF calculators, you can benefit greatly from it. But before we tell you all about its benefits and how to use it, let’s take a minute or two to understand what it is and how it works.
What is a PPF Calculator?
It is an online tool that will help you calculate the amount of interest you will earn based on the amount of money you deposit. Using an online-based PPF account calculator is much easier than doing it manually, which would involve using formulas and mathematical calculators where it is very easy to make mistakes.
A PPF calculator will provide you with error-free and mistake-free data that you can trust, but the same cannot be said for doing it manually. Some PPF calculators can also work as a FD interest calculator and provide multiple benefits.
How Does It Work?
PPF Calculator uses the same formula you would have to use if you do it manually, but it does so without any manual effort. Also, it does the whole calculation in under a second, which is error-free. As of now, if you are a PPF account holder, you will receive interest at a rate of 7.1%, which is compounded annually. However, the 7.1% rate is not final, and it depends on the government of India that regulates it. Here are some of the main parameters that a PPF account calculator uses to achieve its results.
- What interest rate you will get will depend on the amount of money currently in the same account.
- But, in case you deposit more money into the account, that is before the 5th day of that month, then the interest rate for that month will also be calculated now. However, if it’s after the 5th day, then the interest rate will be solely based on the previous month.
- The interest rate is usually calculated between the 5th and the last day of each month.
- If you invest annually in your PPF account, then it is better that you deposit the money before April 5th of every year.
How To Use PPF Calculator?
Using a PPF account calculator is not as hard as it used to be. All you need to do is input some specific parameters, such as-
- Tenure of Your Account
Tenure of your account means the total time period of this account. In other words, how long it has been since you first opened that account. You can input anything between 5 – 99 years. It is similar to the FD interest calculator.
- Deposit Amount
The amount of money that you choose to deposit every year. The interest that you receive will directly depend on this amount.
- Interest rate
The current interest rate for PPF accounts is 7.1%. However, that may change at any moment and is regulated by the government.
What Should You Keep in Mind if You Are a PPF Account Holder?
Here are some things you should keep in mind if You are a PPF Account Holder.
- The interest you are supposed to receive for the deposited money will be generated at the end of every year.
- This annual interest is compound interest, so the amount will be compounded annually.
- Even if you originally created the account at high interest, it can change at any moment. It actually depends on the government.
- Since it’s compound interest, the interest that you earn will continue to grow.
Using a PPF account calculator should be a must if you are a PPF account holder. Those days of manually calculating the PPF interests are gone, thanks to the super easy and intuitive usability of the PPF account calculator. It also saves a lot of time that you would have otherwise spent calculating it manually. Give it a try.
