PPF investment: How ₹5K monthly grows to ₹41 lakh and why investing before the 5th matters

The Public Provident Fund (PPF) remains one of the most popular long-term savings options for risk-averse investors, thanks to its government backing, tax benefits, and assured returns on monthly or lump-sum contributions.

With a 15-year lock-in period and the option to extend in blocks of five years, PPF is often used to build a stable retirement corpus. Investors can extend their tenure multiple times. PPF offers the best returns when held for the long term.

At present, the deposit rate is 7.10% per annum, which is reviewed by the government every quarter. The interest rate has remained unchanged since 1 April 2020.

How does PPF work?

An individual can invest a minimum of ₹500 and a maximum of ₹1.5 lakh every year in their PPF account. The scheme follows the principle of annual compounding, meaning investors earn returns not only on their original investment but also on the interest accumulated over time.

For investors contributing ₹5,000, ₹10,000, or ₹12,000 monthly, the final corpus after 15 years—and even more so with extended tenure—can be substantial. The extension feature allows investors to continue earning interest on their accumulated balance while making fresh contributions.

PPF allows deposits in instalments (up to 12 times in a financial year) or as a lump sum. While you can invest monthly, interest is calculated on the lowest balance between the 5th and the end of each month, so it is best to deposit before the 5th.

How much will a ₹ 5K investment grow in 15 years

If you invest ₹5,000 every month ( ₹60,000 annually) for 15 years at an assumed interest rate of 7.1%, the maturity value will be approximately ₹16.2 lakh. Of this, your total investment is ₹9 lakh, while the interest earned is about ₹7.2 lakh.

If you extend the investment for another 5 years, the corpus can grow to around ₹26.6 lakh in 20 years.

Continuing for 25 years, the corpus may rise to about ₹41.2 lakh. In this case, the total investment would be ₹15 lakh, while the interest earned could be around ₹26.2 lakh.

How much will a ₹ 10K investment grow in 15 years

If an individual invests ₹10,000 every month ( ₹1.2 lakh annually) for 15 years at 7.1%, the maturity value will be approximately ₹32.5 lakh. Of this, the total investment is ₹18 lakh, while the interest earned is about ₹14.5 lakh.

After a 5-year extension, the corpus can grow to around ₹53.2 lakh in 20 years. If continued for 25 years, it may rise to approximately ₹82.4 lakh.

How much will a ₹ 12K investment grow in 15 years

If you invest ₹12,000 every month ( ₹1.44 lakh annually) for 15 years at 7.1%, the maturity value will be approximately ₹39.05 lakh. Of this, the total investment will be ₹21.6 lakh, while the interest earned is about ₹17.45 lakh.

After a 5-year extension, the corpus can grow to around ₹64 lakh in 20 years. If continued for 25 years, it may rise to nearly ₹99 lakh, bringing you close to building a ₹1 crore corpus.

Tax benefits of PPF

PPF enjoys one of the most favourable tax treatments among investment options in India, as it falls under the EEE (Exempt-Exempt-Exempt) category.

This means contributions to a PPF account are eligible for tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh in a financial year. Additionally, the interest earned is tax-free, and the maturity proceeds are also tax-exempt.