Money Mantra: Wealth Multiplier: PPF and the magic of compounding

 MANAGING YOUR Public Provident Fund (PPF) efficiently is key to maximising returns and building a secure financial future. PPF is a popular long-term investment scheme backed by the government, offering attractive tax benefits and guaranteed returns. So, start early and contribute regularly to the PPF account. The PPF tenure is 15 years but the power of compounding works best when you begin early. Deposit the minimum required amount annually ( ₹500) up to the maximum limit ( ₹1.5 lakh) to fully leverage the scheme’s tax-free interest. Make your contributions ideally before April 5 each fiscal year, so the entire amount earns interest for that year.

Automate contributions if possible. Many banks and post offices allow standing instructions or auto-debit options for PPF accounts. Automation ensures discipline and timely deposits, which are essential for maxi­mising the 7-8 per cent annual interest rate credited at fiscal year-end.

Avoid partial or late deposits. Deposits made after March 31 do not earn interest for that year, but deposits made after the fifth of the month will not qualify for the interest for that month. Timeliness matters to keep compounding intact.

Leverage the loan and withdrawal facility wisely. You can take loans up to 25 per cent of your balance or make partial withdrawals with in certain limits from the seventh year onward. Use these options prudently only when urgent needs arise, so your funds continue growing otherwise.

Know the maturity and extension rules. After 15 years, either with­draw the entire corpus tax-free or extend the account in blocks of five years to continue earning interest without new deposits. Extending allows your savings to benefit from compounding for a longer period.

Claim tax benefits. Contributions up to  ₹1.5 lakh yearly qualify for Section 80C deduction. Interest earned and maturity proceeds are tax-exempt, making PPF one of the most tax-efficient instruments.

So start early, contribute the full allowed amount consistently each year, ensure timely deposits, use withdrawals or loans sparingly, and consider extending the account on maturity. These strategies ensure your PPF works as a powerhouse of safe, tax-free compound­ing for long-term wealth creation.