Investors who use the Public Provident Fund (PPF) can earn a little more money by following a simple rule. They should deposit money before April 5 every year. This small step can increase their returns over time.
PPF is a government-backed savings scheme. It is popular because it offers safe returns and tax benefits. At present, it gives an interest rate of 7.1% for the April–June 2026 quarter. The scheme runs for 15 years, and it can be extended in blocks of 5 years.
How Interest is Calculated
Many people do not know how PPF interest is calculated. The interest is based on the lowest balance between the 5th and the last day of each month.
Because of this rule, the date of deposit is very important.
- If you deposit money between April 1 and April 5, you will earn interest from April itself.
- If you deposit after April 5, your money will start earning interest only from May.
This means you lose one month’s interest if you deposit late.
Example to Understand
If you invest the maximum allowed amount of ₹1.5 lakh before April 5:
- You earn interest for the full 12 months
- At 7.1%, you get about ₹10,650 in a year
But if you invest the same amount on April 6:
- You earn interest for only 11 months
- You get around ₹9,763
So, you lose about ₹887 in just one year.
Impact Over Time
This small loss may not look big in one year, but it increases over time.
If you invest ₹1.5 lakh every year at the start of the financial year for 15 years:
- Total investment = ₹22.5 lakh
- Final amount = about ₹40.68 lakh
- Interest earned = about ₹18.18 lakh
This happens because your money gets more time to grow and benefit from compounding.
However, if you delay your investment every year:
- Your money gets less time to earn interest
- Final amount may reduce to about ₹37.80 lakh
This means you can lose nearly ₹2.9 lakh over 15 years just by delaying your deposit by a few days each year.
Conclusion
Depositing money in PPF before April 5 is a simple but powerful strategy. It helps you earn more interest and increase your final savings over the long term.
