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Every guardian tries to create a big fund for the better future of his child.
Child PPF: The biggest advantage of PPF is not just its returns but the time that your money gets to grow. When you start investing when your child is young, the power of compounding gets many years to work.
Child PPF Rule: Nowadays, the cost of education and making a career has increased so much that in every house there is daily planning and brainstorming regarding this. From the time the child is small, planning for his secure future has to be done. Be it college fees or professional course expenses in the future, every parent starts investing as soon as possible. Currently, there are many types of investment options in the market but the fluctuations of the stock market also scare people. In such a situation, Public Provident Fund (PPF) emerges as an option which has the backing of the government. This means that your money is safe and you can almost exactly calculate what will be the size of the future fund created by the investment you are making for your child.
It is important for every parent or legal guardian to know that they can open a PPF account on behalf of their minor child. This account of the child works just like a regular PPF account. Let us give you detailed information about the Child PPF Scheme so that you can take a smart and informed decision for your child.
How much can be invested in the PPF account in the name of the child?
While opening a PPF account in the name of a child, one should know a very important rule because often people remain confused about it. In a financial year, the total contribution taken together in the parent’s own PPF account and the child’s PPF account cannot be invested more than Rs 1.5 lakh. This means that if you are already investing a maximum limit of Rs 1.5 lakh every year in your account, you will not be able to invest separately in your child’s PPF account.
How much fund will be generated in 15 years by investing ₹ 5000 every month?
If you deposit Rs 5000 every month in your child’s PPF account, then you are depositing Rs 60 thousand in a year. Your total investment in 15 years will be Rs 9 lakh. Currently, 7.1 percent interest is available on PPF accounts (as per the rate applicable from April 1 to June 30, 2026). If you do your calculations accordingly, then when the investment in PPF account matures in 15 years, it will be around Rs 16.3 lakh. Keep in mind that this calculation has been done assuming 7.1 percent interest rate as fixed. That means, accordingly, you earn interest of more than Rs 7 lakh on your investment. Keep in mind that the actual maturity value may change slightly as the government reviews PPF interest rates every quarter.
The magic of compounding and 5 year extension
The biggest advantage of PPF is not just its returns but the time that your money gets to grow. When you start investing when your child is young, the power of compounding gets many years to work. Even though this monthly investment may not seem very big, the interest earned every year also starts earning interest. Due to this the fund keeps increasing continuously. Many parents do not know that it is not mandatory to close the PPF account after completion of 15 years. If the money is not needed immediately, the PPF account can be extended in blocks of 5 years with new contributions. This can be beneficial if your child is a few years away from higher education or you want to grow the fund further.
It also has tax benefits
Under the current rules, PPF is one of the few investment options that benefits you in several steps. From tax point of view, it is eligible for deduction under Section 80C. The income earned from this is completely tax free.
What precautions should be taken regarding PPF?
Keep in mind that PPF will not work for every financial goal of yours. There is a long lock-in period and withdrawals are allowed only under certain conditions. If you’re saving for expenses that may arise in the next three or four years, you’ll need more flexible investment options.
It is also important to keep in mind that it is not possible to accurately estimate how much will be spent on a child’s higher education after 15 years. Despite this, delaying investment only makes the path to reaching any goal difficult. In such a situation, you must take an informed decision at the right time for the future of your child.
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The post Child PPF: How much money will you get in 15 years if you invest ₹5000 every month in your child’s PPF account, check the calculation. first appeared on informalnewz.
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