Rs 1.54 crore retirement corpus through PPF: How many years will it take if you invest Rs 1.5 lakh a year?

The Public Provident Fund (PPF) is one of the most popular long-term savings options for low-risk investors. The PPF offers stable returns, tax-free interest and tax benefits on deposits under Section 80C of the Income Tax Act, 1961.

While the maximum investment allowed in a PPF account is Rs 1.5 lakh a financial year, many investors wonder how long it would take to build a corpus of Rs 1.54 crore through disciplined annual contributions.

The answer depends on how much you invest every year and how long you stay invested. Since PPF offers the power of compounding, even relatively modest annual investments can grow into a sizeable retirement corpus.

PPF interest rate

The government currently offers an interest rate of 7.1% per annum on PPF deposits. Interest is calculated monthly and is credited to the PPF account at the end of each financial year.

Can Rs 1.54 crore retirement corpus from the PPF be created in 15 years?

The PPF maturity period is 15 years. However, an investor can take five years of unlimited extensions with contribution. Without contribution, they can take one extension of five years.

In our calculation, we will see if it is possible to accumulate Rs 1.54 crore if an investor invests Rs 1.5 lakh every financial year. For the calculation, we will also assume that the PPF interest rate will remain at 7.1% throughout the investment period. To get the benefit of the PPF interest rate, one needs to make the lump sum investment of Rs 1.5 lakh by April 5 every financial year.

A Rs 1.5 lakh deposit every financial year (the current maximum annual PPF contribution) in the PPF grows to about Rs 40.68 lakh in 15 years. Here, the total interest generated is Rs 18,18,209 and the invested amount is Rs 22,50,000. Even if someone takes an extension of five years and contributes the same Rs 1.5 lakh every financial year, they can accumulate a Rs 66.58 lakh corpus in 20 years.

It shows that it is not possible to accumulate Rs 1.54 corpus even in 20 years, let alone 15 years. Then how many years, it may take to accumulate a Rs 1.54 crore corpus through the PPF?

How can you generate Rs 1.54 crore retirement corpus through PPF?

If an investor starts investing the full Rs 1.5 lakh every year from age 30 and does it continuously till age 60, they can create a Rs 1.54 crore corpus. However, for that they need to take three extensions of five years each, need to contribute Rs 1.5 lakh by April 5 every financial year and the interest rate should also remain the same at 7.1%.

Rs 1.54 cr corpus calculation

Starting age for PPF investment: 30 years
Invest till: 60 years
Annual investment: Rs 1.5 lakh
Interest rate: 7.1% per annum
Investment period: 30 years
Estimated corpus at 60 = Rs 1.54 crore (approximately)
Total investment in 30 years: Rs 45 lakh
Estimated interest earned: Rs 1.09 crore