- Deposits in PPF account can be made in lump-sum or in maximum 12 installments.
- The interest on balance in your PPF account is compounded annually and is credited at the end of the year.But the point to remember is that the interest calculation is done every month: the interest is calculated on lowest balances in account between 5th and the last day of the month.So if you deposit after 5th of a month, you don't earn interest for that month.
- The ideal way to maximise the interest on your PPF account would be to invest Rs 1.5 lakh (the maximum investible amount in a year) at one go at the beginning of the financial year.
- PPF accounts follow an April-to-March year so to earn the maximum interest, you should deposit the amount on/before 5th of April every year.
- A one-time deposit will earn interest for the whole year.
- if you want to deposit some amount every month, remember to deposit on/before 5th of that month. This will help you to earn interest for that month.
Example :
Suppose, you deposit Rs 15,000 every month in 10 instalments. A back-of-the-envelope calculation suggests that if you deposit before 5th of every month, you can earn extra monthly interest of close to Rs 105 and for 10 months it would help you to earn Rs 1,050 more, at the interest rate of 8.7 per cent. For a long-term investment product like PPF, if you follow the habit of depositing before 5th of every month, it could mean bigger retirement kitty for you.
