You can save Rs 1.5 crore for retirement using this simple investment technique; know how

A Public Provident Fund (PPF) investment is one of the safest ways to build healthy, tax-free retirement funds. It's one of the few saving schemes that compounds your investment over time and generates tax-free returns. Other high-return investment products, such as NPS, mutual funds are taxed at withdrawal or redeemed in phases making PPF more attractive.

The scheme’s interest has been unchanged since the first quarter of FY22 at 7.1 percent, which may not be as lucrative as returns given by other schemes such as mutual funds ELSS, but is certainly risk-free.

A monthly investment of Rs 12,500 or Rs 1.5 lakh per year in PPF, generating 7.10% return, will enable an investor to build a corpus of over Rs 1 crore. In order to increase this amount further, investment tenure may be increased by in blocks of 5 years.

If you start a PPF account between the ages of 25 and 30, and then extend it by a block of 5 years three times, you can easily increase the investment for 30 years before retiring. The investment amount of Rs 1.5 lakh every year for 30 years will turn give you a maturity amount of Rs 1.54 crore, provided the current interest rate of 7.1 percent remains constant.

Out of the Rs 1.54 crore, Rs 45 lakh is your own investment and the remaining Rs 1.09 crore comes as interest over the 30-year period. PPF is a government-backed small-savings scheme which gives moderate returns but comes with many tax advantages, tax exemptions, and the promise of capital protection. The interest and returns earned are not taxable under the Income Tax Act under the scheme.

Investments under the scheme can be made in a single payment or over a period of up to 12 months in a year. For each financial year, the minimum investment is Rs 500 and the maximum is Rs 1.5 lakh in a year. The present interest rate under the scheme is 7.1 percent per year, and maturity tenure is 15-year term. Deposits of up to Rs 1.5 lakh per year qualify for an annual tax deduction under Section 80C of the Income Tax Act 1961, making PPF one of the greatest tax-planning devices for salaried individuals. The government determines PPF’s interest like all other small savings schemes.