What If I was Invested Rs.3000/- Per Month In PPF Since Yr.2000-01:

Origin of this post is the comment placed by one of the reader  and can be read here.Thanks to the comment I don’t find any need to search for the old interest rates between 2000-2003.

In that particular post we were ended assuming current rate of 8.60% will avg out for next 20 yrs and accordingly calculation was done.But here we will take a view of investments made since April 2000 to March 2012.

As most of us aware,PPF rates are now dynamic and can vary with surrounding market conditions.I found many people argue that it will not come below 8% at any scenario,,but finally interest rates behaves like commodity and free from any imaginations.Some years back banks were offering 16% ..Once upon time US federal reserve rates were around 18% and now just near to zero i.e.0.25%….Though this example is quite different but  just put here to know about the interest rate risks….

Suppose today I invest Rs.1 lakh in PPF and  rate of interest is 8.60%,,but it will not guaranteed for entire lock in period… if due to some reasons after 2-3 yrs interest rates slides below ,,suppose to 6%,I need to accept it  as I can not withdraw my money..this is not guaranteed scenario but this kind of risk will always their with PPF.

But then also PPF is the most attractive saving avenue for any type of investor..Its safe(its guaranteed that I will receive more than I have invested) ,tax free maturity(quite attractive for any one in higher tax brackets),80C benefits Etc.

Here we will consider that investor have invested Rs.3000/- per month since Apr 2000 to March 2012 on 1st of each month.

Just as usual I have shown the cumulative flow below graphically..values shown in the data table are at the end of march of every year:

 Maturity value Comes : Rs.7,19,325

For this maturity value returns avg out at: 8.15% CAGR.