« Why shouldn't you buy term insurance up to age 80? Or 100? What are the best target maturity debt funds in 2023? »

What is the latest PPF rate? What are the historical rates for PPF?

Posted on 30 Jan 2023
Author: Sayan Sircar

Tags: Choosing Investments

5 mins read

This article gives you the current and historical interest rates for PPF so that you can decide if investing in PPF is the right option for your portfolio.

What is the latest PPF rate? What are the historical rates for PPF?

📚 Topics covered:

What is the public provident fund (PPF)?
What is the current PPF rate?
Historical interest rate and investment limits of PPF
A few commonly asked questions on PPF investment

What is the public provident fund (PPF)?

As per Wikipedia, the Public Provident Fund (PPF) is a savings-cum-tax-saving instrument in India introduced by the National Savings Institute of the Ministry of Finance in 1968. PPF allows you to save small sums of money, and offers a guaranteed interest rate and tax benefits that make it attractive for many conservative investors.

PPF is a fantastic debt instrument which has guaranteed return (though it has fallen over time) but it is still higher than the market rate in other options. Since there is a 15 years lock-in (which can be extended in blocks of 5 years) and to keep the account active you need only ₹500/year, open it and keep it active. Later when you need to invest more amount in long-term debt investments, both the maturity of PPF will be closer and you will have many options like debt mutual funds. You can open PPF in your own name plus in the name of your parents if they don’t have one already. When you get married and have children, you repeat this for your spouse and children.

PPF is an EEE-class instrument which means that it is exempt from tax on investment up to 1.5 lakhs/year under 80C, exempt from taxation during growth and there is a full exemption on taxes at maturity.

Recent articles:

1 / 3

<p>This article helps you estimate the returns from your investments to help you decide how much you need to invest.</p>

2 / 3

<p>This article extends the concept of a target date fund for one-time goals like house downpayment for investors in India.</p>

3 / 3

<p>This article explains how retirees should allocate their investments between equity, debt and cash buckets for their post-retirement portfolio.</p>

❮ ❯

Join our WhatsApp community: You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

What is the current PPF rate?

The latest PPF rate is 7.1%

Historical interest rate and investment limits of PPF

Using data from National Savings Institute, we plot the historical interest rates and limits of PPF investment since 1968.

Historical interest rate and investment limits of PPF

Some observations:

PPF rates before the 1980s were below the levels of today
will PPF rates go lower from the current levels: history shows us that it has been a lot lower, and there is no reason why it cannot go a lot lower
there was a long period of 15-ish years (Apr-1986 to Jan-2000) where interest rates were their highest, i.e. 12%. If you have a longing for those rates, do remember the condition of the economy in the same period
PPF investment limit has been rising over the years and is currently capped by the same ₹150,000 limit as Section 80C tax deduction

In the sections below we will cover a few commonly asked questions on PPF.

A few commonly asked questions on PPF investment

Which is better for the long-term - PPF or mutual funds?

PPF vs mutual funds for 15 years

Our analysis using SENSEX data from 1979 shows that stock investing in SIP form over a 15-year horizon has given better returns than investing in PPF.

Should you invest in PPF for your child’s college education?

If your college admission date is 15 years or more away, then a PPF account can be used. However, the returns from PPF are below the usual college fee inflation of 10% (or more), you need equity mutual funds as well to ensure that you meet your goal.

How much should you invest in PPF?

For long-term goals, PPF is a good option. For goals that are more than 15 years away, the typical asset allocation, i.e. mix of equity and debt in the portfolio, should be around 60:40. This means that your monthly investment should also follow the same 60:40 rule. As long as you are investing at least enough in equity as per the asset allocation, the rest can be in PPF and other debt investment options.

Complete set of FAQs on PPF

We have an extensive list of questions on PPF here: Frequently asked questions on Public Provident fund (PPF): the complete guide.

What's next? You can join our WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

Discover an article from the archives

Worked out case studies for goal-based investing

Case study: how this double income recently married family can perform DIY goal-based investment planning

This article shows how a young just-married couple can invest for future goals using the Arthgyaan goal-based investing tool.
Case Study: How should couples in their 40s with a new baby plan their financial future?

Did you welcome a bundle of joy in your 40s? This article will discuss ways of planning the child’s (and your’s financial future)
Case study: how this double income single kid family can perform DIY goal-based investment planning

This article shows how a very typical salaried couple with one child can invest for future goals using the Arthgyaan goal-based investing tool.

Previous and next articles:

Insurance

Why shouldn't you buy term insurance up to age 80? Or 100?

This article explains why it is a waste of money to buy a term insurance policy beyond the usual retirement age of 60.

Published: 25 January 2023

8 MIN READ

<p>This article gives you the latest view on target maturity debt funds for investors in 2023.</p>

Choosing Investments Mutual Funds

What are the best target maturity debt funds in 2023?

This article gives you the latest view on target maturity debt funds for investors in 2023.

Published: 1 February 2023

1 MIN READ

Latest articles:

<p>This article helps you decide when to prepay your home loan - at the beginning, middle or end of the total loan period.</p>

House Purchase

Should you prepay your home loan at the beginning or at the end of the tenure?

This article helps you decide when to prepay your home loan - at the beginning, middle or end of the total loan period.

Published: 19 March 2023

2 MIN READ

Portfolio Construction

How much returns should you estimate for your goals?

This article helps you estimate the returns from your investments to help you decide how much you need to invest.

Published: 15 March 2023

4 MIN READ

Topics you will like:

Asset Allocation (19) Basics (8) Behaviour (10) Budgeting (10) Calculator (14) Case Study (3) Children (11) Choosing Investments (31) FAQ (4) FIRE (11) Gold (6) Health Insurance (4) House Purchase (14) Insurance (14) International Investing (8) Life Stages (2) Loans (9) Market Movements (10) Mutual Funds (22) NPS (5) NRI (5) News (6) Pension (6) Portfolio Construction (42) Portfolio Review (24) Real Estate (4) Retirement (33) Review (11) Risk (6) Safe Withdrawal Rate (5) Set Goals (26) Step by step (9) Tax (19)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
OR
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.