Table of Contents
A PPF calculator is considered to be a useful online financial planning tool for more than one reason. Such an online calculator aids users to find the earnings they would generate on their invested amount in a Public Provident Fund account and whether the sum will align with their financial objectives.
The PPF calculator essentially computes the returns on one’s investment by using the in-built formula. This keeps the process quick and hassle-free and simplifies the complicated process, which involves multiple variables such as interest rate, tenure, and principal. Thanks to the PPF calculator users can determine how much money they would need to build a retirement corpus to sustain their current living standard post-retirement.
Read along to find out how a PPF calculator can help you plan your retirement better.
How Does an Online PPF Calculator Assist the Users?
A PPF calculator is intended to assist users to develop a smart approach to mobilizing their savings. Essentially, the PPF calculator factors in multiple variables such as principal amount, tenure, and rate of interest to compute estimated returns. The purpose of the tool is to help users track their investment growth and savings by offering insight into their estimated earnings.
Here are a few ways in which a PPF calculator helps a user –
Helps you estimate interest earnings:
The online PPF calculator offers a fair understanding of how much money one could generate on their Public Provident Fund deposits.
Allows to pick the most suitable tenure:
The PPGF calculator offers a quick estimate of the maturity amount against a fixed tenure. Additionally, it allows users to multiple adjustments to the tenure variable. Further, This helps users to determine which investment tenure is most lucrative and will allow them to build a large corpus.
Helps pick an ideal principal amount:
Using the online calculator one can easily ascertain which principal amount could help them achieve their long-term financial goal.
Saves time:
PPF calculator comes preloaded with scientific formulas that offer quick results, eliminating the need for manual computation. This simplifies calculations and saves a lot of time that would otherwise be spent on manual computation.
Eliminates the risk of manual errors:
Computing the PPF maturity amount involves a lot of steps. Further, which makes the exercise complicated and prone to errors. However, when a person uses an online PPF calculator they effectively minimize the risk of making any calculations errors.
Facilitates quicker comparison:
A PPF calculator is available for free and allows multiple adjustments to its variables. This allows the users to tweak the investment details such as principal amount and tenure for comparing which combination of the variables is most likely to help them achieve their goals. With the available information, they can plan their finances better.
This makes the Public Provident Fund tool an effective investment calculator that helps determine returns and plan financial approaches with correct use.
Public Provident Fund Formula
A PPF calculator comes preloaded with a formula that aids in calculating the Public Provident Fund maturity amount and offers results quickly. Moreover, This automated process simplifies the whole thing, making the tool a desirable aid. That said, here is the formula that a Public Provident Fund calculator uses to help find the maturity amount and interest earnings:
F = P [({(1+i) ^n}-1)/i]
Here,
- I denote the interest rate
- F denotes the PPF maturity amount
- N denotes the total number of years
- P denotes the annual installments
Example of PPF Calculation
Take a look at the example of PPF calculation below to understand how the tool helps compute maturity amount and more –
Suppose Nidhi invests Rs. 200,000 in a Public Provident Fund account annually for a tenure of 15 years. The PPF scheme yields interest at 7% per annum. Using the formula –
F = P [({(1+i) ^n}-1)/i]
= 200,000 [({(1+7) ^15}-1)/7]
= 5,763,698
Hence, at the end of Nidhi’s 15-year investment tenure, she will receive a sum of Rs. 5,763,698 from her Public Provident Fund account.
Since the formula is complex, the calculation involves multiple steps which is not only time-consuming but also prone to mistakes. Thanks to a PPF calculator, individuals can easily avoid such hassles and simplify the computation process significantly.
How to Use an Online Public Provident Fund Calculator?
Individuals can easily access PPF calculators online and use them for free. Above all, PPF calculators usually have a user-friendly interface, making them easier to use and access. The ease of use makes the task of computing and comparing PPF maturity amounts seem simpler and more feasible.
While the entire process is quite simple and can be carried out in a few minutes. Moreover, having an understanding of how to access the tool makes the users more confident. Additionally, individuals need to figure out their investment goals and current financial standing to plan their investments better with a PPF calculator.
To use the calculator, users need to feed these investment details into the financial tool to ascertain the PPF maturity value –
- Investment tenure
- Investment amount
- Rate of interest
- Frequency of investment
This is why it is recommended to identify one’s financial goals beforehand to make an informed and effective comparison.
Once the user feeds these key details into the investment calculator, the tool will display the result almost immediately. However, one must note that variables like the interest rate are closely dependent on external factors and could vary among fiscal years.
If the first Public Provident Fund deposit is made on the 2nd of April of a year. Also, the interest rate of the scheme will depend on the current financial year. Additionally, any change in the government’s monetary policy and inflationary rate could impact the returns from Public Provident Fund.
However, before investing in a PPF scheme, it is recommended to go through the features and limitations of the investment option. Having a thorough idea of the same will help understand whether a Public Provident Fund scheme is suitable to meet one’s financial goals or not.
Photo by Scott Graham on Unsplash