There’s a large stratum of the population that is yet to be covered by the mutual fund industry. Revolutionizing technology is what is not only leveraging but also contributing to the much-needed push to expand the reach of fixed deposits. In this digital era, technology is a necessity. In any walk of life, its ubiquitous propinquity has made things more intuitive, simplistic, and easily accessible. It helps simplify the fixed deposit market. Caught in a web of digitalization, fixed deposits have become a secure investment option as it has started to make use of technology for fund management, feasible transaction options, and simple customer servicing. The digitalization of the application process and the convenient online payment spectrum have led to the exponential rise of this industry over recent years.
To further simplify the investment process in Fixed Deposits, technology has also birthed accessible FD calculators such as a PPF calculator to help digitally evaluate the amount to be incurred at the end of a tenure period. Let’s understand how technological advancement such as this helps in further penetration across regions and investors in India associated with the investment avenue. This article elucidates on how to leverage technology to simplify investment in Fixed Deposit. This is explained for a PPF and how a PPF calculator is a blessing in disguise. Read on to find out in-depth detail on this sector.
How to leverage technology to simplify investment in Fixed Deposits. Image Source: canva.com
What is PPF?
A PPF, also known as Public Provident Fund, is a tax-free savings scheme offered by the Government of India. Here the interest on the account is fixed for every quarter and is provided by the government. The applicable rate of interest on a public provident fund for the year 2020-21 from 1st April to 31st June 2020 (first quarter) has been fixed at 7.1%. The rate of interest for January to March 2020 was at 7.9%.
What is a PPF calculator?
A PPF calculator is a tech-friendly financial tool that comes handy while performing complicated PPF calculations quickly and accurately. This calculator helps to estimate the yearly PPF returns that can be earned by providing your PPF calculator over a predetermined period and with a specified frequency. The PPF calculator is a versatile calculator that does not require a bank-specific calculator, such as an HDFC PPF calculator or an SBI PPF calculator. This is because the government circumscribes the rate of interest, maturity, withdrawal rules, and taxation, and thus, the same rules apply irrespective of where the account gets opened.
Impact of PPF Calculator Technology
Leveraging innovation to help financially strategize has led to the technological evolution of financial calculation to make investment more accessible, efficient, and convenient for every user. A PPF calculator can put complex formulas into use more quickly, providing accurate results of maturity amount and also saving time and hassles of manual calculations. This additionally enables you to plan your monthly expenses better and potentially make smarter, more calculated monetary decisions. In a nutshell, the PPF calculator technology is invaluable and as a widespread impact on financial well-being apart from easy-computational perks.
Tech-friendly Use of PPF Calculators
To make the most of this tech-friendly PPF calculator, you need to provide this financial tool with the following inputs.
- Deposit Amount: This is the principal amount that gets deposited in your account according to the deposit frequency. For instance, if the deposit amount is INR 2,500 and Deposit Frequency is monthly, then the total PPF deposit for the year will be INR 30,000, which will be automatically computed by the PPF calculator
- Deposit or Payment Frequency: As the name suggests, this is the predetermined periodic intervals during which the deposit amount is shared. This can be selected as monthly, quarterly, half-yearly, or annually, as per your convenience. Quarterly deposits are made every three months, i.e., four times a year, half-yearly deposits take place twice a year, and so on
- Rate of Interest: This is the rate of return to be expected on the PPF investment. To calculate the PPF interest rate, check the latest PPF interest rates that are available online
- Tenure of the PPF account: The minimum tenure of the PPF account is 15 years, extending to a maximum of 50 years, and having an option of further extension in blocks of 5 years
On providing the above inputs into the PPF calculator, getting instant, accurate information on the PPF maturity amount, PPF interest obtained, the total PPF investment, and more, is just a click away! Also, you can check out Scripbox’s PPF calculator to discover more.
Use a tech-friendly PPF calculator to accurately plan your retirement with a PPF account. Image Source: canva.com
The Formulae Used by PPF Calculators
PPF calculation uses the compound interest calculation formula, and the compounding of the PPF principal occurs annually, i.e., once a year. The PPF calculator makes use of the compound interest formulae given below.
A= PPF Maturity Amount incurred at the end of the tenure period
P= PPF Principal amount that gets invested
r= PPF rate of interest
t= Timeline of investment in the PPF account
Using the above PPF interest calculation formula, you can compound the PPF principal occurring annually. Moreover, the longer the investment time, the larger is the interest incurred on your PPF account. There are some ground rules to keep in mind while calculating the PPF.
- The minimum that can be annually invested in the PPF account is INR 500
- The maximum amount that can be invested annually is INR 1.5 lakh
- Compounding of interest happens only once every year, at the end of the financial year
- The maturity of a PPF account is in 15 years, and the proceeds are entirely tax exempted
- The PPF rate is subjected to change every quarter as per the announcements made by the Finance Ministry
In a Nutshell…
The technology sector is steadily advancing, and the feasibility and ease of accessibility that comes with it have strengthened the cause of digitalization. Thus, advanced technology approaches in banking solutions will ensure that your investments in mutual funds face near-term headwinds. The role of technology is only going to get bigger, moving forward, to bestow the ultimate benefits and ease of convenience on investors.