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
Tags: 
Choosing Investments
7 mins read
Choosing Investments
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This article explains how PPF interest calculation works so that you can invest in the best month to get the maximum interest.
This article is a part of our detailed article series on Public Provident Fund (PPF). Ensure you have read the other parts here:
-
SENSEX vs PPF report card 2024: should you invest 1.5 lakhs in PPF in April?
This article compares how the PPF has performed against the SENSEX since 1979 to help investors decide if they should invest a lump sum in PPF in April 2024.
-
How much money has been made by investing in the Public Provident Fund (PPF)?
This article shows the maturity amount of investing in the Public Provident Fund (PPF) for 15 years as per historical interest rates.
-
How to get the most interest when investing in PPF?
This article compares the various ways of investing in PPF to show which gives the most interest.
-
SENSEX vs PPF report card 2023: should you invest 1.5 lakhs in PPF in April?
This article compares how the PPF has performed against the SENSEX since 1979 to help investors decide if they should invest a lump sum in PPF in April 2023.
-
What is the latest PPF rate? What are the historical rates for PPF?
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.
-
When does a PPF account mature?
This article shows you a quick way to know when your PPF account will mature depending on the date you opened the account.
-
Frequently asked questions on Public Provident fund (PPF): the complete guide
This article compiles an exhaustive list of FAQs on the Public Provident fund (PPF).
-
PPF vs. mutual funds: which is better?
The article presents a historical analysis of investing in stocks vs. PPF since 1979.
-
Should you renew your PPF account or invest in mutual funds?
A Step-by-step guide for PPF account holders approaching maturity in April. This post shows how to decide between extension vs. withdrawal.
📚 Topics covered:
- How is interest calculated for PPF?
- How much interest do you get based on the month when you invest in PPF?
- Should you invest ₹1.5 lakhs in PPF by 5th April?
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
How much interest do you get based on the month when you invest in PPF?
Based on the calculation method discussed above, if you invest by the date of
- 5-Jan-2024, you will get interest for the month of Jan 2024 and onwards
- 5-Feb-2024, you will get interest for the month of Feb 2024 and onwards
- 5-Mar-2024, you will get interest for the month of Mar 2024 and onwards
- 5-Apr-2024, you will get interest for the month of Apr 2024 and onwards
- 5-May-2024, you will get interest for the month of May 2024 and onwards
- 5-Jun-2024, you will get interest for the month of Jun 2024 and onwards
- 5-Jul-2024, you will get interest for the month of Jul 2024 and onwards
- 5-Aug-2024, you will get interest for the month of Aug 2024 and onwards
- 5-Sep-2024, you will get interest for the month of Sep 2024 and onwards
- 5-Oct-2024, you will get interest for the month of Oct 2024 and onwards
- 5-Nov-2024, you will get interest for the month of Nov 2024 and onwards
- 5-Dec-2024, you will get interest for the month of Dec 2024 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 2024, you will get tax benefit for this financial year
- after 31st March 2024, 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.
Related Articles
- How much money has been made by investing in the Public Provident Fund (PPF)?
- What is the latest PPF rate? What are the historical rates for PPF?
- PPF vs. mutual funds: which is better?
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