PPF interest rate 2020: Returns in Public Provident Fund investment in 2020 | Fusion - WeRIndia

PPF interest rate 2020: Returns in Public Provident Fund investment in 2020

PPF interest rate 2020: Returns in Public Provident Fund investment in 2020

The Indian money market is a pool of numerous savings and investment schemes for all groups of people. Along with the private banks and financial institutions, the government also encourages investments by introducing several savings schemes for the citizens of the country. Public Provident Fund (PPF) is one such savings scheme that offers reasonable benefits along with tax benefits. Individuals with a limited monthly income highly prefer PPF schemes to mobilize small investments. Banks, financial institutions, Post Offices, are all authorised by the government to facilitate PPF accounts.

The major factor of consideration for every investment or savings scheme is the interest rate that it offers. For those who are planning to open a PPF account in 2020, it is vital to know the prevailing interest rate. The PPF interest rate 2020 is important to know given the market fluctuations sometimes lead to significant changes in the rates. The current account holders, as well as the eager investors, should keep a track record of the interest rate trends to get an estimation of returns.

Small amounts of savings every month in a PPF account will yield long term high returns.

Interest Rate On PPF Accounts In 2020

The interest rate on PPF accounts is revised quarterly by the National Savings Institute of the Finance Ministry of India. Although the interest rate revises quarterly, the calculation is done every month. The PPF interest rate 2020 will be charged on the lowest amount in the account from the 5th of every month to the last day. Therefore, one has to make the transaction before 5th of every month to earn interest on it. Consistent delayed payments can incur a loss at the end of tenure.

The PPF interest rate 2020 for the first quarter (January-March 2020) was 7.9%. This amount was decreased to 7.1% in the second quarter (April-June 2020). The government has made no revisions in the PPF interest rate 2020 after the second quarter; it has remained the same since then, and it will prevail in the market until any further notice. Investors should use PPF calculators to get an estimation of the returns taking the current interest rate into account.

PPF Interest Trend At The Time Of Maturity

The calculation of interest rate on PPF accounts at the time of maturity is based on the weighted average of all the interest rates that were declared during the years in which the account was active and operational. For instance, the PPF interest rate 2020 is 7.1% in October’20 and it was 7.9% in January. So, if an account has its maturity date in October, the eligible interest rate will not be 7.1% but the weighted average of all the quarters in which the account was active.

PPF Interest Trend For Minors

The interest rate calculation trend for minor PPF accounts is the same as that of adults. However, since minor accounts are operated by the legal parents of a child, the maximum contribution limit to both the accounts (the minor and the adult account) is INR 1.5 lakhs. One has to make a proper division of the maximum amount that he wishes to invest in the PPF scheme.

PPF Interest Trend For NRIs

An NRI (Non-Resident Indian) is not eligible for opening a PPF account. However, if an Indian citizen had an account before he left the country, he can continue to maintain his savings until the date of maturity. In that case, the regular PPF interest rate 2020 will be levied on the total balance.

PPF Interest Trend For Senior Citizens

If a senior citizen opens the regular PPF account, he will receive the general interest rate that applies to the other accounts. However, the government has also launched schemes that are specifically for senior citizens. PMVVY (Pradhan Mantri Vaya Vandana Yojana) and SCSS (Senior Citizens Savings Scheme) offer marginally higher interest rates.

PPF Interest Trend After Death

If any unfortunate event leads to the demise of a PPF account holder, the total balance is paid to the nominee of the account. One must note that the nominee or any other family member of the deceased individual is not liable to make any further contributions to the account. However, if the nominee chooses to hold the balance in the account till maturity, it will continue to accrue interest. At the time of maturity, the general rule of interest calculation will be applicable.

The Power of Compounding on PPF Savings

PPF accounts operate taking the power of compounding into account. That is, the amount of interest that an investor will accrue from PPF interest rate 2020 will be added to the principal amount of the account. This rule leads to higher returns in the long run.

Working professionals and salaried individuals must open a PPF account for saving a part of their hard-earned money. All one has to make sure is not missing the due date of payment at the beginning of every month!

Image by Nattanan Kanchanaprat from Pixabay (Free for Commercial Use)

Image Reference: https://pixabay.com/photos/money-coin-investment-business-2724241/

Leave a Reply

Your email address will not be published. Required fields are marked *