PPF Maximisation Strategy

Savings & Deposits

PPF (Public Provident Fund) has specific rules that, when optimised, significantly increase returns: deposit before the 5th of each month (to earn interest for that month), invest Rs 1.5L in April at start of year (maximum interest benefit), and extend the account in 5-year blocks beyond the 15-year maturity.

In detail

PPF optimisation rules:n1. Invest before 5th of month: interest credited on minimum balance between 5th and last day of month. Deposit on 6th = lose that month's interest.n2. Annual lumpsum in April: Rs 1.5L deposited in April earns interest for all 12 months (vs December deposit earns only 4 months).n3. 15-year maturity options: extend for 5-year blocks with or without deposits. Extension with deposits: Rs 1.5L/year continues, 80C benefit continues, EEE status maintained.n4. 5th year onwards: partial withdrawal allowed (up to 50% of balance at end of 4th year preceding withdrawal year).

Formula

Annual interest difference (April vs March deposit of Rs 1.5L at 7.1%):nApril deposit: earns Rs 1.5L x 7.1% = Rs 10,650nMarch deposit: earns Rs 1.5L x 7.1% x 1/12 = Rs 888nDifference: Rs 9,762 per year from timing alone

Real-life example

🇮🇳 India example

Rohan deposits Rs 1.5L every April 1 (before 5th). His brother deposits Rs 1.5L every March 31. Same amount. After 15 years: Rohan's PPF = Rs 40.68L. Brother's = Rs 39.3L. Difference of Rs 1.38L purely from deposit timing. Compounded: Rohan gets Rs 1.38L more for zero extra effort.

Frequently asked questions

Can I open a PPF account for my minor child and claim 80C? ▼

Yes. You can open PPF in a minor child's name. Deposits qualify for your 80C deduction (not child's). However, your combined PPF limit (your account + minor's account) = Rs 1.5L total, not Rs 3L. After the child turns 18: they manage their own account and get their own Rs 1.5L 80C limit.