Every parent dreams of a completely secure financial future for their child. If you wish to build a substantial fund for your child's education, wedding, or even their retirement, the Public Provident Fund (PPF) is an excellent and safe option. The 'power of compounding' in PPF works such magic that you can create a corpus of ₹1 crore for your child with a small monthly saving of just ₹1,900.

Let’s understand this through a calculation:
1. If you deposit ₹1,900 every month for 50 years, starting right from the child's birth, a fund of ₹1 crore will be created:
* Monthly investment: ₹1,900 (a saving of just ₹63 per day)
* Annual investment: ₹22,800
* Interest rate: 7.1% per annum (current rate set by the government)
* Investment tenure: Approximately 50 years (the account would need to be extended in 5-year blocks after the initial 15-year maturity)
* Total deposited amount: You will deposit a total of ₹11,62,800 over 50 years.
* Earnings from interest: Thanks to the power of compounding, you will earn approximately ₹91,80,000 in interest alone on this investment.
* Total amount at maturity: After 50 years, the total fund will grow to ₹1,03,42,000 (over ₹1 crore).
In other words, by the time your child turns 51, they will have become a 'crorepati' (millionaire) without having spent a penny from their own pocket.

2. Alternatively, if you start investing for your child when they are 5 years old and deposit ₹2,700 monthly for 45 years, your total investment will be ₹14.58 lakh. You will earn over ₹87.58 lakh in interest, resulting in a total fund of ₹1.02 crore by the time the child reaches the age of 50. 

Key Facts About PPF
1. 100% Tax Exemption (EEE Category)
The biggest advantage of a PPF investment is its tax-free status. It falls under the 'Exempt-Exempt-Exempt' (EEE) category. This means that investments of up to ₹1.5 lakh annually qualify for a tax deduction under Section 80C of the Income Tax Act. Furthermore, the annual interest earned and the entire maturity corpus—potentially reaching ₹1 crore—are completely tax-free.

2. 15-Year Lock-in and 5-Year Extension
The maturity period for a PPF account is 15 years. To achieve the ₹1 crore goal, you should not close the account after the initial 15-year term. By submitting a form, you can extend the account indefinitely in blocks of 5 years.

3. Who Can Open This Account?
Any parent or guardian can open a PPF account in the name of their minor child at any post office or bank. Once the child attains the age of 18 (becomes a major), the operation of the account is handed over to them, and they can continue the investment on their own.

4. Investment Limits
You can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh in a PPF account during a financial year. If you increase your investment amount beyond ₹1,900, the goal of accumulating ₹1 crore will be achieved well before the 51-year mark.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.