POSTED BY January 21, 2014 11:48 am COMMENTS (7)

ONI have decided to invest in PPF(max limit of 1 lakh). I am in dilemma over the timing to invest

1) Invest in Feb : Get only 2 months interest. Can withdraw one year earlier

2)Invest in April : Get benefit of entire year interest. Withdrawal one year later

will loss of 10 months of interest + one year earlier withdrawal of option 1 outweigh benefit of option 2? or is option 2 more beneficial?

Please Advise

Dear Vz1jhrp, please open PPF account in April 2013. Yes you read it right, April 2013 to get maximum interest for full FY. Are you not putting to much emphasis on opening date? Seeing your push to squeezing maximum juice I’m offering this impossible solution. I may sound rude but I’m replying only for your greed. 🙂

Do not open PPF account if the idea is to maximize the juice. Eq. investing for 40-50Y period ‘ll provide more return.

Thanks

Ashal

Hello Ashal,

Thanks for the additional information. I have one more query . I will be out of town for a few weeks and hence am compelled to open a PPF account in SBI by the 28th of this month

1. will i get interest benefit for the month of January if i deposit the full amount by 28th of this month? ( i guess not as least amount from Jan 5 which in my case will be zero till end of Jan 31 is considered)

2. Can i open a PPF account with zero balance by Jan 28 and then deposit the full amount between Feb 1 and Feb 5 via netbanking?

or

I need to make minimum payment of 100(?) and then put the balance full amount between Feb 1 and Feb 5 via netbanking?

Thanks

Dear Vz, actually opening account now ‘ll benefit more if you need to withdraw in between after the compkletion of initial 6FY. So account opened now ‘ll be eligible for withdraw after 31st March 2020 where as for account opened in April 2014, ‘ll be eligible for withdraw in April 2021. that’s one more advantage in opening account now other than the calculation discussed above.

Thanks

Ashal

Thanks for this example .It made my decision simple and straightforward . As pointed out by you in point 2, Even if i keep the money in savings account it will more than make up the loss of 22,000

I will suggest to open an ppf account now.

1. You are losing 10 months interest (which is not a big deal, considering the investment horizon)

2. You will get the money early, you can use the proceeds at that time to invest in fd which will compensate for your loss of interest.

3. Investing now will give you Rs 30,41,000 investing after 2 months will give you Rs 30,63,201. You are losing only Rs 22,000 (i am assuming , you are making Rs 1,00,000 every year @8.5%).

Thanks,

Rahul

How will the option 2 matters? How will you gain anything by delaying 2 months and invest in April?

1) Invest in Feb : Get only 2 months interest. Can withdraw one year earlier

In this case you will get 2 months interest for this FY 2013-14 and Full year interest(compounded) for next FY (2014-15)

2)Invest in April : Get benefit of entire year interest. Withdrawal one year later

In this cause you will get interest of FY (2014-15)

Now decide which one is beneficial

Thanks

Sibin

Can you rephrase your question properly ?. It all depends on your tax bracket category and goal