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PF fund is considered an important investment tool for salaried employees and a Universal Account Number (UAN) for every PF account is allotted by the EPFO.

If you are wondering how to make the most out of your investments then this is for you. Do you know by simply planning your deposits you can earn way higher on the investment made in Public Provident Fund (PPF). This is because if you deposit at the beginning of the month you will get the maximum amount of interest for your deposit. So if you are also planning to invest in PPF in the new financial year 2021 to save tax or simply as an investment then you should do it before the 5th of April. Here is why:

First, try to understand how the interest is calculated every month. The interest is calculated on the minimum balance in the PPF account between the fifth and the end of each month. In simple words, the interest is paid for the month if you invest before the fifth of that month otherwise you get the interest amount only on the previous month’s balance.

Let’s understand with the help of an example. Assuming you already have Rs 5 lakh deposited in your PPF account, and you invest Rs 50,000 on April 3rd, then at the current interest rate of 7.1% your monthly interest would be (7.1%/12 X 5.50 lakh) = Rs 3,254. In the second scenario, assume you invest Rs 50,000 on April 10th. Now the interest will be calculated on the minimum balance between April 3rd and April 30th. The calculation works out to Rs 2,958 (7.1%/12 X 5 lakh).

Therefore, to make the most you should try to invest the maximum amount before the 5th of April of every financial year. Consider this: If you deposit Rs 1.5 lakh every year at the start of the financial year, before the 5th of April each year, you will earn around Rs 2.69 lakh more than the investor who deposits at the end of the financial year. The maturity value stands at Rs 40.68 lakh if you invest at the start of the financial year (before 5th April). The same amount works out to Rs 37.98 lakh if the investments are made at the end of every financial year for the lock-in period of 15 years at an interest rate of 7.1 %.

“If PPF is your preferred investment avenue then you can maximise your return by investing in it at the beginning of the financial year. But most people don’t have enough savings to invest lump sum at the beginning of the year. In such cases staggered investments can also be done before the 5th of April every year,” said Pankaaj Malade, the Mumbai-based certified financial planner.

It is important to note that PPF is one of the preferred investment avenues because of its tax-free status. It is one of the few instruments that are tax-free at all stages of investment. First, when you deposit you get the deduction of Rs 1.5 lakh under section 80C. Second, your interest earned is tax-free and then at the time of withdrawal also your entire maturity amount is tax-free. In addition, it gives investors the highest interest rate, with the sovereign guarantee, in the fixed income space. Currently, PPF is giving a return of around 7.1% when fixed deposits are giving an average return of around 5-5.5%.

Invest in PPF at the beginning of this year to maximise your interest amount.