While investing in PPF i.e. Public Provident Fund, the 5th of the month is considered very important. The reason for this is that the interest received on PPF account is decided on the basis of minimum balance from 5th of every month to the last day of the month. Understand that if an investor deposits money in his PPF account after the 5th of the month, then he does not get interest on that additional amount for that month. This means that late investment results in direct loss of interest.
Understand the mathematics of interest for the whole year
Suppose you invest Rs 1.5 lakh in your PPF account. If you deposit this amount on or before April 5, 2026, this amount will be included in the interest calculation for the entire month. In such a situation, you will get interest for the whole year till March 2027.
At the current interest rate of 7.1%:
Annual interest = Rs 1,50,000 × 7.1% = Rs 10,650
Monthly interest = 10,650 ÷ 12 = Rs 887.50
But if you deposit this amount after April 5, you will not get interest for that month. That means you will lose one month’s interest.
In such situation:
Total annual interest = Rs 10,650 – 887.50 = Rs 9,762.50
That means, with a delay of just a few days, you may suffer a loss of Rs 887.50.
Therefore, experts recommend that you should always invest in PPF on or before the 5th of the month, so that you can get full interest every month and get maximum returns on your investment.
Tips to get maximum interest in PPF
Invest a lump sum at the beginning of the year: If you want to take full advantage of the entire year in PPF, it is wise to deposit a lump sum at the beginning of the financial year. With this, you get interest on your entire amount for the whole year and the returns become higher. Apart from this, it is also beneficial to continue regular monthly investments.
Use Internet Banking: Internet banking is a better option to ensure timely investment. Through this, you can deposit money in your PPF account easily and on time every month. This reduces the chances of being late and you are saved from loss of interest.