What is a PPF calculator?

A Public Provident Fund (PPF) calculator is an online long-term investment tool designed to help investors calculate the potential returns and growth of their investments in a PPF account.

It considers various factors such as the contribution amount, interest rate, and investment duration to estimate the maturity amount and the interest earned over a period. 

If you are someone who is planning to invest in PPF and not sure how much to invest or how much returns you may get on investing a certain amount, our PPF calculator is here for you. 

By using a PPF calculator, you gain a clear understanding of the future value of their PPF investments, make informed financial decisions, and effectively plan their savings.

Once you decide the amount you can afford to invest on a regular basis, the calculator considers the tenure to be 15 years and the prevalent interest rate to calculate the returns. 

However, ensure that you make your PPF investments before the 5th of the month, or else you will not receive the interest for that month. This is because the PPF interest is calculated on the lowest balance between the close of the 5th day and the last day of every month. 

Thus, a PPF contribution made on the 5th of a month will be taken into consideration for interest calcultion and will earn interest for that month, while any PPF contribution made after the 5th of the month will not earn interest and result in a loss of interest for that month. 

Why use a PPF calculator?

Here’s why you should use a PPF calculator:

Plan your investments: It helps you visualise how your PPF grows, thus helping you plan your contributions to reach desired financial goals, which could be building a retirement corpus, children’s education, marriage, etc.

Compare investment options: You can compare PPF returns with other options, such as bank deposits, helping you make informed financial decisions.

Maximise your contributions: It will help you effectively utilise the full Rs.1.5 lakh annual limit by understanding how different contribution frequencies impact returns.

Track your progress: You can monitor your PPF’s growth over a period, keeping you motivated enough to remain on track to meet your financial goals.

How to use PPF Calculator?

You can follow the easy steps mentioned below to use the PPF calculator to calculate your PPF investments accurately:

Select the frequency of investment: The frequency of your investment will influence your maturity value. Ideally, select monthly in case you are salaried for more convenient investment and accurate results.

Enter the monthly PPF investment: It is the amount you wish to invest in the PPF account. You could input a monthly, quarterly, semi-annual, or annual amount. Also, ensure that your investment amount is not more than Rs 12,500 per month or Rs 1.5 lakh a year.

Select the duration of investment:  It is the time you will continue your PPF investment. The minimum time available is 15 years, and you have the option to extend the term in batches of five years after that. The PPF calculator assumes that you will be investing the same amount till the time of maturity.

Check the future value:  Once you enter all the above details, our calculator will automatically show the maturity amount. 

How the PPF Calculator Can Help You?

The PPF calculator makes it easy for an investor to keep track of their account balance and growth. It can also aid in resolving your queries regarding changing interest rates or how they affect your maturity value.

The online tool accurately calculates your potential profit and shows you the data within a short span of a few seconds.

You are only required to provide few basic information such as deposit amount, tenure and investment frequency. After this, you can automatically see the current PPF interest rate on the calculator. This makes the PPF calculations quick and easy to use for anyone.

Formula used for calculating PPF

A PPF calculator uses a similar formula that’s used for calculating the future of an annuity. Simply put, it calculates the future value of your investment, depending on the annual contribution you make towards the PPF and the prevailing interest rate. 

The calculation formula that a PPF calculator uses is as follows:

M = P [ ( { (1 + i) ^ n } - 1 ) / i ] 

In which:

M = Maturity benefit

P = Annual installments

i = Interest rate

n = Number of years

The part after the P in the formula is the annuity factor, which when multiplied with the annual contribution, provides the maturity value of the PPF investment. 

Illustration:

Let’s say, you make annual contributions of Rs 1,00,000 for 15 years and the PPF account interest rate is 7.1%.

By using the above-mentioned PPF calculation formula:

M= Rs 1,00,000 [({(1+0.071)^15}-1)/i] = Rs 27,12,139

PPF calculator example table

The concept of the power of compounding and how it works in favour of an investor when it comes to PPF calculation could be explained with the following table, which highlights the PPF interest earned, the principal invested and the PPF maturity value for 15, 20, and 30 year tenures.

In this PPF calculation example, it is assumed that the annual investment amount is Rs 1,50,000, and the PPF interest rate is 7.1% per annum (the current PPF interest rate is 7.1% for Q4 of FY 2023-24). 

The above example highlights the power of compounding when investing in PPF – your maturity amount rises from Rs 40 lakh to Rs 1 crore merely by investing Rs. 1.5 lakh over a 15-year period to a 30-year period.

Advantages of using PPF calculator

Some of the key advantages of using a PPF calculator include:

• Assists in estimating the interest earned on a specific investment amount 
• Provides an idea to figure out the maturity period of the investment 
• The estimation provided is calculated on the total investment done in the current financial year 
• Aids in tax-saving by providing a clear understanding of the interest earned on the total investment done 
• Gives accurate results by entering the deposit amount and the deposit type 

Alternative Investment Options

There are various alternative investment options to PPF, such as Equity-Linked Saving Scheme (ELSS), Unit-Linked Insurance Plan (ULIP), National Savings Certificate (NSC), National Pension System (NPS), Senior Citizen’s Saving Sscheme (SCSS), tax-saving Fixed Deposit (FD), etc.

Related Content:
PPF - Interest Rate 2024, Tax Benefits, Withdrawal & Account Opening
PPF Withdrawal Rules
How To Open PPF Account