The PPF calculator is a financial tool, it helps in calculating the investment value of your provident fund over a certain period. PPF is basically a public provident fund scheme that are offering several benefits. It’s a long-term investment option that comes with a lock-in period of 15 years. PPF is one of the best schemes to generate a better ROI. It is also known as a tax-saving scheme. However, the yearly contribution of the PPF account is capped at Rs 1.5 lakh.
When you use a PPF calculator online, the calculator will simply apply the PPF calculation formula to calculate the investment return in terms of interest after a certain number of years. It is one of the best ways to adopt a disciplined approach to building a strong retirement corpus.
To get accurate results in the PPF calculator, you need two inputs from you. You need to input the annual contributions you expect to make over the next certain number of years, and the number of years for which you will continue contributing. While using the PPF calculator, you need to remember that interest rate never remains certain, it changes each quarter, so the calculations also change quarterly.
Following is the PPF calculation formula that a PPF return calculator uses:
M = P [ ( { (1 + t) ^ n } - 1 ) / i ] x ( 1 + i )
Where
M is Maturity Value
P is Annual Payments
NNumber of years
i Interest Rate
For example : The annual contribution is Rs 1 Lakh Interest Rate- 7%
M = ₹ 1 lakh [ ({ (1 + 7%) ^ 15 } - 1 ) / 7% ] x (1 + 0.07)
M = ₹ 27, 12, 139