Interest rate history of Public Provident Fund(PPF)
When it comes to Safe Investment or savings, the debt markets should be considered. Although the debt market investments are available in the mutual funds, but still we have a safer side on Banks and Post Offices. There are so many small savings schemes available in the above said. The state and private employees do not have a regular pension today, the Provident fund(PPF) is still attractive.
If we see the PPF interest rate history over the last 20 years, it was decreasing due to the inflation rate. However it is always a good investment avenue for the retirement life. Prior to the year 2001, the interest rat for the PPF, was above 10 percent. On that period, Inflation in India is just a bit too high. From the year 1986 to 2000, the interest rate were stood at 12 percent.
This is the rate that Mutual Fund investments are giving today. The period between 2001 and 2002, the public provident fund interest rate were seen at 9 to 10 percent. After the year 2003, the interest rate has been steadily declined from the 9 percent, which was seen in the early 2002. During this period, the Recurring deposits are 10-14%.
The Public Provident Fund, which was 9 percent in the year 2003, then it has been reduced to 8 percent in the Financial year 2016-17. At the starting of 2018, the interest rate for PPF was 7.60 percent, which is the 20 year low rate. At the end of last year 2018, it was increased from 7.60 percent to 8 percent. The Ministry of Finance had earlier said that the interest rate for PPF Investments will remain unchanged and at the same rate of 8 percent in the January-March period in the current year.
Generally, the Government will announce (update) the rate of interest for small savings schemes once in three months. Today, the Stock market and the Mutual funds providing better long term returns, while the PPF is one of the safest investment on retirement planning.
Even the current rate for the PPF is lower as compared to other investment avenues, still this is a pension tool for everyone who needs to plan for the retirement. One start their PPF account online or simply go to the nearest nationalized bank or Post office to open an account. Income Tax act under 80C, we can get the tax exemption up to Rs. 1.50 Lakhs for the Public Provident Fund investment. The Minimum investment amount for the PPF is Rs. 500/- and the interest rates are compounded annually.
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