Many mother and father begin a Public Provident Fund (PPF) for his or her youngsters however cease a couple of years down the road. Opening a PPF on your youngsters is a wonderful thought, however you additionally have to be constant on your baby to reap the profit.
“As per paragraph 3 of the Public Provident Fund Scheme, 2019, any mum or dad or authorized guardian can open a Public Provident Fund account within the identify of a minor baby. Please notice that no more than PPF one account will be opened within the identify of an individual. Under the PPF scheme, 2019 there isn’t a restriction on any of the mother and father or each mother and father contributing to the PPF account of a minor baby,” stated tax and funding knowledgeable Balwant Jain.
Benefits of opening PPF account for minor1)Lock-in interval
One of the advantages of the PPF account is its 15-year lock-in interval. And as soon as the kid turns 18, he/she will be able to resolve whether or not to shut the account or lengthen it.
“Your baby can select whether or not to close the PPF account or hold it open as soon as they flip 18 and the account has served its required lock-in interval of 15 years. Children who open PPF accounts when nonetheless younger can keep away from lock-in sooner or later,” said Vinit Khandare, CEO and Founder, MyFundBazaar.
As a result, PPF is regarded as a solid investment option, but because of its lengthy lock-in term of 15 years, liquidity becomes an issue. For your youngster, this drawback will be eliminated or diminished, he added.
A family can have as many PPF accounts; one for each member is also possible. However, each individual can have only one PPF account either in Post Office or Bank and the maximum total amount that an individual can invest/deposit in a financial year is limited to ₹1.5 lakh.
3) Compounding
If you want to invest in a financial instrument with low risk, the government-backed Public Provident Fund is the way to go.
4) PPF interest rate History
Pankaj Mathpal, MD & CEO at Optima Money Managers said that when the kids grow up, the interest rate on PPF will not be 7%, it will be lower as there was a time when this scheme used to offer 12%. So, till the time your child grows, he will have a corpus amount with EEE status. PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. “It is always recommended that the account be opened early on in life rather than later, to get the maximum benefit out of PPF,” stated Pankaj Mathpal.
Compounding can create a snowball impact, as the unique investments plus the earnings earned from these investments develop collectively.
The historical past of PPF rates of interest reveals that the Public Provident Fund Account rate of interest between 1 April 1986 to 31 March 1988 and 1 April 1988 to 14 January 2000 was 12%.
In the final 10 years, the PPF rate of interest has assorted between 7.1% to eight.8%.
PPF rate of interest
The present PPF price is 7.1%.
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Updated: 30 Jun 2023, 09:09 AM IST
