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How To Become a Millionaire by Investing Just Rs 500 in the PPF Scheme

Let us understand, How To Become a Millionaire by Investing Just Rs 500 in the PPF Scheme. PPF full form is Public Provident Fund.  It is one of the investment schemes introduced by Government for a long term.

How To Become a Millionaire by Investing Just Rs 500 in the PPF Scheme

How To Become a Millionaire by Investing Just Rs 500 in the PPF Scheme | Image by Nattanan23: Pixabay

Why PPF is so popular and what are its key features?

The Public Provident Fund (PPF) is a safe and secure investment option and not impacted by the market. It offers attractive interest rates, tax benefits, and flexible investment options. Thus, making it an ideal choice for an investment for people with a low-risk appetite. Below are some of the key features of the PPF Scheme:

  1.  Safe and Secure Investment: It is safe and secure because it is backed by the Government.
  2. Attractive Interest Rates: The government decides the interest rates for the PPF scheme, which are reviewed on a quarterly basis. Currently, the PPF scheme offers an annual interest rate of 7.1%.
  3. Tax Benefits: The PPF scheme provides tax benefits under Section 80C of the Income Tax Act. You can claim a deduction on investments up to Rs 1.5 lakh in the scheme. The interest earned and the maturity amount are also tax-free.
  4. Long-term Investment: The maturity period of the PPF account is 15 years. However, you can extend the account for additional 5-year blocks after the maturity period.
  5. Flexible Investment Options: You can invest in the PPF scheme through a lump sum or monthly installments.

As we are now familiarized with PPF scheme. Next step is to understand the process of opening the PPF account.

PPF Account Opening Process

Opening a PPF account is very simple. You can open a PPF account at a post office or a bank branch with a minimum investment of Rs 500. Below steps will guide you on how to open a PPF account:

  1. Choose a Post Office or Bank: You can open a PPF account with a post office or any nationalized bank.
  2. Fill the Application Form: Obtain the PPF account opening form from the post office or bank, fill it with the necessary details, and submit it along with the required documents.
  3. Deposit the Initial Amount: You can start your PPF account with a minimum deposit of Rs 500 and a maximum of Rs 1.5 lakh per financial year. You can make the investment in a lump sum or 12 installments.
  4. Nomination: You can designate a nominee for your PPF account at the time of opening the account or later.

Please note: A person can open only one PPF account.


Investment Strategies for the PPF Scheme

Once you have your PPF account is opened, please follow the below points to get maximum benefits:

  1. Invest the Maximum Limit: To maximize your returns, invest the maximum allowed limit of Rs 1.5 lakh per financial year.
  2. Invest Early in the Financial Year: To earn maximum interest, invest the entire amount at the beginning of the financial year or in equal monthly installments.
  3. Extend the Maturity Period: After the 15-year maturity period, extend your PPF account for additional 5-year blocks to continue earning interest and accumulating wealth.

So far we understood the benefits of PPF, how to open PPF account and what steps to follow to get the maximum benefits.  Now let us understand, how you can become millionaire (Lakhpati) by investing just Rs. 500 in this scheme. Below are the steps:

How To Become a Millionaire by Investing Just Rs 500 in the PPF Scheme

Step 1: Initial Investment

Start by investing Rs 500 every month or Rs. 6000 every year  in your PPF account. At the end of the first year, your total investment would be Rs 6,000. With the current interest rate of 7.1%, your total accumulated amount at the end of the first year would be Rs 6,427.

Step 2: Consistent Monthly Investment

Continue investing Rs 500 every month for the next 15 years. By the end of the 15-year maturity period, your total investment would be Rs 90,000, and your accumulated amount, considering an interest rate of 7.1%, would be Rs 1,62,728.  Below calculation is based on Rs. 600o per year.

PPF Calculation


You must be thinking, if there are any disadvantages of PPF Scheme.  Yes, there are few:

Disadvantages of Investing in the PPF Scheme

Despite its numerous advantages, the PPF scheme may not be suitable for all investors due to some drawbacks:

  1. Liquidity Constraints: The PPF scheme has a lock-in period of 15 years, making it a relatively illiquid investment option.
  2. Limited Investment Options: The PPF scheme does not offer the flexibility to invest in various asset classes like equity, debt, or gold, limiting your investment choices.
  3. Inability to Beat Inflation: The interest rates offered by the PPF scheme may not be sufficient to beat inflation in the long run, affecting your real returns.

The Public Provident Fund (PPF) scheme is for people looking for long term and risk free investment.  Consult a financial advisor to create a well-balanced investment plan as per your financial goals and and needs.

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