Saving money is tough. Even tougher is deciding where to put your savings.
Two popular options keep popping up. PPF and money back policy. People get confused between them all the time. Should you use a PPF interest calculator and invest there? Or is a money back policy better for you?
Let’s figure this out together.
What is PPF?
PPF means Public Provident Fund. It’s a government savings scheme.
You put money in. It grows with interest. After 15 years, you get everything back. Simple as that.
The government sets the interest rate every quarter. Right now it hovers around 7-8% per year. Not bad at all.
Your money is completely safe here. Why? Because the government backs it. Even if banks collapse, your PPF money stays untouched.
Understanding a PPF Interest Calculator
A PPF interest calculator is just a tool. Free online.
Enter three things:
- Yearly deposit amount
- Number of years
- Current interest rate
The calculator shows exactly what you’ll have at the end.
Example: invest Rs. 1 lakh yearly for 15 years at 7.1% interest. You’ll have around Rs. 31.7 lakh. That’s deposit plus interest.
No complex math needed.
What is a Money Back Policy?
A money back policy is different. It’s insurance first, investment second.
Here’s how it works. You pay a premium every year. The insurance company gives you life cover. But they also return some money to you at fixed intervals while the policy is active.
Say you take a 20-year money back policy. You might get 20% of your sum assured after 5 years. Another 20% after 10 years. Then 20% after 15 years. The remaining amount comes when the policy ends.
If something happens to you during this time, your family gets the full sum assured. That’s the insurance part.
Key Differences Between PPF and Money Back Policy
Purpose
PPF is pure savings. Money back policy mixes insurance with savings.
Returns
PPF gives clear, predictable returns. Use a PPF interest calculator and you know exactly what you’ll get.
Money back policy returns are lower. Usually 4-6% annually.
Flexibility
PPF locks money for 15 years. Partial withdrawals start from year 7.
Money back policy gives you money at intervals. But stop paying premiums and you might lose benefits.
Tax Benefits
Both save tax under Section 80C up to Rs. 1.5 lakh.
PPF interest is completely tax-free. Money back policy maturity is tax-free if conditions are met.
Risk
PPF has zero risk with government guarantee. Money back policy depends on the insurance company.
When PPF Makes Sense
Go for PPF if you want guaranteed returns. No surprises.
It’s great for long-term goals. Retirement planning works well with PPF. So does saving for your child’s education 15 years later.
The tax-free interest is a big plus. Every rupee of interest is yours.
People who want to build wealth slowly but surely love PPF. Check any PPF interest calculator and see how money grows.
When Money Back Policy Works Better
Need life insurance anyway? Then money back policy kills two birds with one stone.
You get family protection plus periodic payouts.
This works if you need money at regular intervals. Maybe for education expenses every few years.
The policy forces you to save. Some people need that discipline.
Young parents often pick this. They want life cover and money for their kids’ growing needs.
Calculating Your Returns
Let’s look at real numbers.
PPF Example:
Invest Rs. 1.5 lakh yearly for 15 years at 7.1% interest.
A PPF interest calculator shows total maturity of around Rs. 40.68 lakh.
Your contribution was Rs. 22.5 lakh. You earned Rs. 18.18 lakh as interest. All tax-free.
Money Back Policy Example:
20-year policy with Rs. 10 lakh sum assured. Annual premium is Rs. 50,000.
You get Rs. 2 lakh after 5, 10, and 15 years. At maturity, you get Rs. 4 lakh plus bonuses.
Total outflow was Rs. 10 lakh. You got back around Rs. 11 lakh. Returns are about 2-3% annually. Plus life cover of Rs. 10 lakh throughout.
PPF wins on returns. Money back policy wins on protection.
Combining Both Strategies
You don’t have to pick just one.
Many people do both. Put some money in PPF for solid returns. Take a money back policy for insurance needs.
This gives you protection and growth. Just stay within your budget.
Common Mistakes People Make
Comparing apples to oranges – PPF and money back policy serve different purposes. Look at what you need, not just returns.
Ignoring inflation – Both give moderate returns. Consider mixing in some equity investments too.
Not using a PPF interest calculator – Don’t guess your returns. Use the calculator.
Stopping money back policy midway – Surrendering early means losing money. Commit for the full term.
Putting all eggs in one basket – Diversify your savings.
Making Your Decision
Ask yourself these questions.
Need life insurance? Money back policy makes sense.
Want maximum returns with safety? Go with PPF.
Can you lock money for 15 years? PPF needs that commitment.
Need money at intervals? Money back policy provides that.
Your answers will guide you. There’s no universal answer that works for everyone.
Final Thoughts
Both PPF and money back policy have their place. Use a PPF interest calculator to see clear projections. Understand what a money back policy offers beyond returns.
PPF builds wealth. Tax-free, safe, predictable. Perfect for long-term goals.
Money back policy gives insurance with benefits. Lower returns but protection and periodic payouts.
Pick based on your needs. Your situation is unique.
Maybe do both if budget allows. Get insurance where needed. Build wealth where it grows best.
Just start saving. Whether PPF, money back policy, or both – begin today. Future you will thank present you.
To read more content like this, explore The Brand Hopper
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