Public Provident Fund (PPF) return calculators and investment calculators are invaluable tools that simplify investment planning. They help you estimate returns, set financial goals, and make informed decisions, ensuring a secure and prosperous financial future. Investing can often seem like a challenging task, especially for beginners. This blog will provide a comprehensive overview of these tools, their benefits, and how to use them effectively.
Understanding Public Provident Fund (PPF)
Public Provident Fund, abbreviated as PPF, is the most in demand savings and tax plan offered by the Indian government. It provides attractive interest rates and returns and is absolutely tax free. In the case of PPF, a lock in period of 15 years stands in place, which can be extended block wise by 5 years.
Understanding PPF Return Calculator
A PPF return calculator is an online tool that will help in estimating the returns on your investment in PPF. You just have to feed the details like annual investment amount and duration of the investment to get the quick calculation of maturity amount and the interest earned.
How to Use a PPF Return Calculator
- Annual investment amount: This is the amount you intend to invest every year in your PPP account. Minimum amount ₹ 500 and maximum ₹ 1.5 lakh per year.
- Investment period: Enter the duration for which you want to keep your investment. The lock in period is a minimum of 15 years, extending in blocks of 5 years.
- Interest rate: The current interest rate for PPF is fixed by the government, which changes quarterly, so do provide the latest rate. It’s usually taken from financial portals or official post office websites.
Once these are entered, the maturity amount and the total interests earned will be shown by the calculator.
Advantages of a PPF Return Calculator
- Correct planning: It helps you plan your finances more accurately as this gives a proper picture of returns you can expect.
- Time saving: It saves time, as you don’t need to manually do the calculations related to returns.
- Decision making: It assists in making informed decisions on whether to extend your PPF account after the initial 15 year period.
Understanding an Investment Calculator
It’s a multi-functional tool that will provide you with an estimate of the amount your investment will be worth in the future, considering the initial investment, periodic contribution, rate of return on investment, and the number of years the money has stayed invested. Be it mutual funds or fixed deposits, an investment calculator can assist you in each kind of investment.
How to Use an Investment Calculator
- Initial investment: This is the amount one intends to invest initially.
- Regular investments: Type in the regular investments the amount you will invest each month or each year.
- Rate of return: Write the expected annual rate of return for the investment.
- Number of years: Type in the number of years you will be invested.
Then, the calculator presents the future value of the investment, the total sum invested, and the total interest earned.
Advantages of an Investment Calculator
- Financial planning: This helps to plan your financial goals by showing the amount of investment required to reach your target.
- Comparative analysis: You can compare different investment options by changing the input parameters.
- Goal setting: It helps in setting realistic financial goals by representing the potential growth of your investments over time.
Practical Example Using Both Calculators
Assume that you want to invest both in a PPF account and in a mutual fund.
- PPF investment: Suppose you decide to invest ₹ 50,000 annually in a PPF account for 15 years. Using the PPF return calculator, you will have to mention the amount you invest every year, the rate of interest applied and the investment period, which is 15 years. The calculator will then show that you will receive a substantial amount as interest and the maturity amount would be huge.
- Mutual fund investment: You also plan to invest ₹5,000 per month in a mutual fund earning an annual return of 12% for a period of 15 years. You open the investment calculator and insert the initial investment of ₹0, a monthly contribution of ₹5,000, an expected rate of return of 12%, and 15 years as the investment duration. The calculator will show you that the future value of your mutual fund investment is many times higher due to the magic of compounding.
Conclusion
Both the PPF return calculator and the investment calculator are absolutely essential for any investor who aims at growing his funds. The investment calculator app essentially helps investors to estimate, with clarity and accuracy, how much returns their investment will make in the future and make better decisions concerning their finances. This makes them useful calculators for both the beginners and the experienced investors, as they may lighten the burden of investing for you and bring you closer to your goals.
