A PPF calculator is an investment tool that helps individuals compute returns on their public provident fund investment quickly and easily. The online financial tool comes with an inbuilt formula that automates the returns calculation process and helps to determine the maturity value of their investment in PPF.
An online public provident fund calculator determines the estimated maturity amount after using information such as principal amount, interest rate, and investment horizon. The outcome helps users gain an insight into the plan’s potential as an investment option. Individuals can also readjust the inputs or modify their investment approach for better earnings.
That said, let’s discuss more about an online PPF calculator and how it facilitates better investment planning.
Use of PPF Calculator
The online calculator is designed to help potential investors determine how much money they need to put into a Public Provident Fund scheme to earn enough returns to meet their financial goals.
Estimating the returns early helps individuals understand whether their preferred investment amount and time horizon would yield substantial returns that could help them achieve their goals or not.
Indeed this information is crucial for readjusting their investment approach to ace their financial goals. It also helps understand how the investment variables impact the returns and the virtue of selecting a reasonable combination of investment and tenure. Individuals can also use the tool to understand whether PPF would be more lucrative than other types of investment instruments.
Online PPF calculator auto-feed the prevailing PPF rate of returns into the tool whenever an individual prompts calculation.
This eliminates the need to track the rate of returns and its changes manuals. Furthermore, it facilitates accurate estimation of returns on PPF accounts and doesn’t hamper the experience even when the user is unaware of the latest change in the PPF rate of returns.
Public Provident Fund Formula
The built-in formula of the PPF calculator automates the entire process, making the process quick, accurate, and less cumbersome.
The PPF calculator uses this formula to compute the returns –
F = P [({(1+i) ^n}-1)/i]
In this formula –
I stands for interest rate
F stands for maturity sum
N stands for an investment horizon
P stands for annual investment
PPF Calculation – Example
Example of PPF Calculation
Suppose Mithilesh plans to invest Rs. 2 lakh in a PPF account every year for 15 years to earn returns at the rate of 7% per annum.
Using the PPF formula –
F = P [({(1+i) ^n}-1)/i]
= 2,00,000 [({(1+7) ^15}-1)/7]
= 5763698
At the end of 15 years, Mithiles will receive
Rs. 5763698 his PPF investment.
Notably, calculating the maturity amount manually involves multiple steps.
This means, that if an individual wants to change the combination of variables more than once, the entire process to compute and compare will take a lot of time. This entire exercise makes the process cumbersome and also susceptible to errors, providing inaccurate results.
However, one can save a lot of trouble if they simply use an online PPF calculator. The financial calculator is pre-loaded with a PPF formula which eliminates the need for manual calculation, thus lowering the room for human errors.
The tool offers quick results and facilitates comparisons. Being a free investment calculator, it allows individuals to make multiple adjustments to the variables. This helps to compare more plans and investment combinations quickly and more accurately.
As a result, the tool helps with proper financial planning and helps mobilize savings smartly.
Hence, the PPF calculator ensures accurate comparisons and facilitates smart planning.
Steps to A PPF Calculator Online?
A PPF calculator is designed to ease user experience. This is why the tool comes with a user-friendly interface and smart features. Above all, the tool doesn’t need any underlying knowledge of PPF or its prevailing interest rate.
An individual can easily use the tool online by just entering basic details into designated fields.
For instance, here’s how one can access and use an online PPF calculator –
Step 1: Go to the website of a trusted financial company
Step 2: Open the PPF calculator page
Step 3: Enter the principal investment
Step 4: Enter the investment horizon
Step 4: Enter the rate of interest
Once all the required fields are filled, the maturity amount will appear on the screen. Individuals can readjust the variables and calculate again in case previous combinations did not offer satisfactory outcomes.
Adantages of PPF Calculator
Using an online PPF calculator helps users plan their finances better and mobilize their saved corpus to generate better returns.
Here are some of the most popular ways in which a PPF calculator can help individuals –
- Helps users determine the estimated maturity amount they would receive from the PPF at the end of the tenure
- Enables to compare the interest amount they would receive from PPF compared to other investment options
- Helps identify the most profitable combination of variables for their PPF investment to generate desired earnings
- Saves a lot of time by offering results faster and enabling quicker comparisons
- Lowers the scope of making a manual error
With this information, individuals can decide whether or not PPF is a profitable investment option for them or not.
It will also help them understand how much capital they would need to invest to build a corpus for their retirement and financial goals.
These insights help make informed decisions and plan investments accordingly.
However, before using the financial tool, it is often encouraged to identify two things – one’s desired returns on investment and financial standing to mobilize savings towards the PPF.
Based on this information, one can make a more reasonable investment move and manage the same without hiccups or a straining budget.
Subsequently, they must find out more about the features of PPFs and note the limitations of the same as a financial product. In addition, it is important to know the terms and conditions binding the PPF account withdrawals and exit options to make the most of the plan to generate returns.