As the 2024 is getting wrapped up, and the new year rolls from tomorrow, give yourself a new beginning.
Here is one thing I would suggest. Aa you grow old, your finances matter more. So, get into the habit of saving and investing for the winter of your life.
You may 45-46 and you have 15 or so odd years to retire from work. So, go for this wonderful investment scheme.
Public Provident Fund Scheme PPF
PPF may not be the investment scheme but just the right scheme that guarantees everything.
Safety of funds.
Stability of funds
And growth
And tax savings
Investing into PPF is like taking up running a long distance running like a marathon. This requires more of character than physical strength or talent.
Slow and Steady
You can start a PPF account with as low as Rs. 500. This is a paltry sum. So, there shouldn’t be any excuse for not getting started immediately.
Getting Started is Well begun and Half Done: As it happens in any venture, it takes a lot of courage and conviction to show up at the start line. Getting there needs a lot of clarity. So get there today and don’t worry about anything else.
Save and Grow
Like I said, investing is like running a marathon. You need to stay steady and pace up according to your potential. So is a PPF. You can go up to saving and investing Rs. 1.5 lacs in a single Financial Year.
What I mean is you can invest any amount and in multiple installments. It’s unlike your RD or FD where you either get to invest in one shot or in fixed amounts. You can invest in any permutation or combination.
Just make sure that these are in total of 12 installments. Ideally, you can save and decide one date in a month and save up to then and deposit.
Or you can do it in a quarter or whatever . As I told you, you have all the flexibility.
The triple benefits of taxation
And then I must tell you that all the money you put in here enjoys the Triple EEE benefits of taxation.
EEE stands for exemption, exemption and exemption. So, the first exemption is for the money you save under PPF. If you put in upto 1.5 lacs, you get the tax benefit under Section. 80 C of the Income Tax Act, 1961.
The second exemption is for the income you generate on your PPF investments. Let me tell you with an example. When you open a FD or fixed deposit for lets say 10 years, you become liable for taxation every 03 months. So, factually, you will end up paying TDS OR TAX DEDUCTED AT SOURCE in every quarter. Whether you know it or not, your bank dutifully deducts it from your FD interest earned( at 10%) and pays it to the Govt of India.
But, not in PPF. Not a single Paisa is moved from your PPF.
The third exemption applies when you withdraw your PPF. It qualifies for 100 % exemption. Mutual funds, stocks, bonds etc gets taxed at 12.5% but talk of PPF, and there is no Income Tax levied for all the interest you made for all these years.
Tenure of PPF
And let’s now talk of the tenure that you have to deposit. You get to invest for 15 years. This is the time you have left for your retirement. After 15 years, you can enjoy the fruits of your Savings.
But, having 15 years to invest dorsnt meant you can’t withdraw money in between. From the third year onwards, you can take a loan against the PPF savings and from the 6 th year you become eligible for partial withdrawals. I recently took out a partial withdrawal when I had to gather margin money for purchase of my dream home. You can withdraw for education expenses of your kids or even for medical exigencies.
So, in a way your funds are not totally locked. And the withdrawal process takes less than a day. Need I say more !
Your funds are with the Sovereign. As long as the Indian constitution exists, your money is safe. Apparently, it means a total foolproof guaranty of funds. And now let me tell the SECRET OF HAVING A PPF.
And the biggest reason
NO ONE CAN TAKE YOUR PPF MONEY. NO ONE CAM ATTACH YOUR FUNDS IN THE COURT OF LAW FOR ANY REASON WHATSOEVER.
So, at the beginning of new year, I thought I should tell you something new but whose wisdom is as old as I am or even older. Because the older the stronger .
