Arthgyaan

Supporting everyone's personal finance journey

Which is the best month to invest in PPF to get the highest interest?

This article explains how PPF interest calculation works so that you can invest in the best month to get the maximum interest.

Which is the best month to invest in PPF to get the highest interest?


Posted on 06 Sep 2023
Author: Sayan Sircar
4 mins read
Get new post notifications on WhatsApp!

This article explains how PPF interest calculation works so that you can invest in the best month to get the maximum interest.

Which is the best month to invest in PPF to get the highest interest?

📚 Topics covered:

How is interest calculated for PPF?

The Ministry of Finance declares PPF rates every quarter. That interest rate is used to calculate the applicable interest every month based on the balance which is the minimum of that between the 5th to the end of every month. This the reason you should invest before 5th of the current month instead of after. The interest is credited on 31st March. If you have 10000 in the account on 5th May, and the rate of interest is 7%, then the new balance is 10000 * (1+7%/12) = 10058 as calculated after 31st May. If you invest 1000 on 15th May and nothing else after that then this new 1000 is not considered in the May balance but will be included in the June balance. If the rate changes to 7.1% on 1st Jul (after Q2 end), then from 5th Jul onwards, 7.1% is the rate used to calculate the new interest. The total interest thus calculated is credited on 31st Mar next year.

Since the amount of interest you get depends

  • on the date of investment. If you are investing before 5th of the month, you get more interest than compared to investing after the 5th
  • the earlier you invest, the more interest you get
Recent articles:
1 / 3
<p>A quick retirement calculation for a reader query who has a good amount of corpus already saved for retirement.</p>
2 / 3
<p>This article explains the PFRDA announcement about a new default scheme under NPS Tier II for government employee subscribers.</p>
3 / 3
<p>As per SEBI rules, mutual fund investors must have nominees in their folios by 1st October 2023 or explicitly opt out. Otherwise they will face restrictions in selling units.</p>

Join the Arthgyaan 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.

How much interest do you get based on the month when you invest in PPF?

Based on the calclation method discussed above, if you invest by the date of

  • 5-Jan-2023, you will get interest for the month of Jan 2023 and onwards
  • 5-Feb-2023, you will get interest for the month of Feb 2023 and onwards
  • 5-Mar-2023, you will get interest for the month of Mar 2023 and onwards
  • 5-Apr-2023, you will get interest for the month of Apr 2023 and onwards
  • 5-May-2023, you will get interest for the month of May 2023 and onwards
  • 5-Jun-2023, you will get interest for the month of Jun 2023 and onwards
  • 5-Jul-2023, you will get interest for the month of Jul 2023 and onwards
  • 5-Aug-2023, you will get interest for the month of Aug 2023 and onwards
  • 5-Sep-2023, you will get interest for the month of Sep 2023 and onwards
  • 5-Oct-2023, you will get interest for the month of Oct 2023 and onwards
  • 5-Nov-2023, you will get interest for the month of Nov 2023 and onwards
  • 5-Dec-2023, you will get interest for the month of Dec 2023 and onwards

On a related note, if you are investing in PPF for saving tax under Section 80C, note that if you invest in PPF

  • before 31st March 2023, you will get tax benefit for this financial year
  • after 31st March 2023, you will get tax benefit for the next financial year

Should you invest ₹1.5 lakhs in PPF by 5th April?

If you follow the discussion above, the best month is therefore at the beginning of the financial year. Therefore April is the best month to invest in PPF since that will always give the highest interest.

However, over a 15-year period, the difference between investing ₹1.5 lakhs/year and investing ₹12,500/month is only ₹40.68 lakhs minus ₹39.45 lakhs or just ₹1.23 lakhs. You, therefore, make very little less money by breaking the investment equally over 12 months as we have shown here: How to get the most interest when investing in PPF?.

We have already shown that PPF has not beaten risky assets like equity in less than 10% of cases since 1979: The latest result of PPF vs. SENSEX.

Therefore, you are significantly hurting your portfolio by investing ₹1.5 lakhs in PPF by 5th April. Instead, invest no more than ₹12,500 and invest the rest in risky assets like equity as per your long-term goals like retirement and children’s education.

What's next? You can join the Arthgyaan 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.

If you liked this article, please leave us a rating

The following button will take you to Trustpilot:

Discover an article from the archives

Worked out case studies for goal-based investing

Previous and next articles:

<p>This article explains the steps for paying TDS on purchasing property in an easy step-by-step manner.</p>
Tax Step by step House Purchase
How to file TDS for Property Purchase: A Step-by-Step Guide

This article explains the steps for paying TDS on purchasing property in an easy step-by-step manner.

Published: 3 September 2023

4 MIN READ


<p>Discover how expats can secure the right salary abroad to get a better than India lifestyle using the concept of purchasing parity.</p>
NRI
Calculating Minimum Salaries for Indian Expats Looking to Shift Abroad

Discover how expats can secure the right salary abroad to get a better than India lifestyle using the concept of purchasing parity.

Published: 10 September 2023

6 MIN READ


Latest articles:

<p>This article shows a handy ready reckoner for home loan EMI amounts for all tenures and interest rates along with the amount of principal and interest to be paid.</p>
House Purchase
How much EMI do I have to pay for my home loan?

This article shows a handy ready reckoner for home loan EMI amounts for all tenures and interest rates along with the amount of principal and interest to be paid.

Published: 29 September 2023

1 MIN READ


<p>A quick retirement calculation for a reader query who has a good amount of corpus already saved for retirement.</p>
Retirement Reader Questions
How much money does this 39 year old investor need to invest per month to retire at 58?

A quick retirement calculation for a reader query who has a good amount of corpus already saved for retirement.

Published: 27 September 2023

7 MIN READ


Topics you will like:

Asset Allocation (20) Basics (8) Behaviour (10) Budgeting (11) Calculator (17) Case Study (6) Children (12) Choosing Investments (38) FAQ (6) FIRE (13) Gold (11) Health Insurance (4) House Purchase (17) Insurance (15) International Investing (10) Life Stages (2) Loans (9) Market Movements (13) Mutual Funds (29) NPS (6) NRI (13) News (9) Pension (8) Portfolio Construction (46) Portfolio Review (27) Reader Questions (6) Real Estate (6) Retirement (36) Review (12) Risk (6) Safe Withdrawal Rate (5) Set Goals (27) Step by step (14) Tax (37)

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.

More posts...

Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled Which is the best month to invest in PPF to get the highest interest? first appeared on 06 Sep 2023 at https://arthgyaan.com


We are currently at 299 posts and growing fast. Search this site:
Copyright © 2021-2023 Arthgyaan.com. All rights reserved.