PPF: Invest ₹1.2 lakh at once or ₹10,000 every month? See the difference

The PPF is a government-backed small savings scheme designed for long-term wealth creation. The current interest rate is 7.1% per annum, and the scheme has a 15-year maturity period. If you invest Rs 1.2 lakh a year, which approach can create a larger corpus? Rs 1.2 lakh once a year or Rs 10,000 every month?

PPF interest is calculated on the lowest balance between the 5th and the last day of each month and credited at the end of the financial year. The interest remains invested and earns further interest. The minimum annual investment is Rs 500, while the maximum is Rs 1.5 lakh. To maximise interest on a lump-sum investment, it is better to deposit it by April 5 each year.

Investing Rs 10,000 every month for 15 years means a total investment of Rs 18 lakh. At an assumed 7.1% interest rate, you could earn approximately Rs 13,55,680 as interest, taking the total amount on maturity to around Rs 31,55,680.

Investing Rs 1.2 lakh every year for 15 years also means a total investment of Rs 18 lakh. At an assumed 7.1% interest rate, you could earn approximately Rs 14,54,568 as interest, taking the maturity amount to around Rs 32,54,568.

The annual lump-sum strategy could generate around Rs 32.55 lakh, compared with approximately Rs 31.56 lakh through the monthly investment approach. That means the annual lump-sum option could generate nearly Rs 99,000 more over 15 years. The calculation assumes the 7.1% interest rate remains unchanged for 15 years and the annual investment is made by April 5 every year.

PPF follows the Exempt-Exempt-Exempt (EEE) tax structure, meaning the investment, interest and maturity amount enjoy tax benefits. The investment deduction is available only under the old tax regime.

The PPF matures after 15 years, while partial withdrawals are permitted from the seventh financial year, subject to applicable rules. After maturity, the account can be extended in five- year blocks.