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Provident Fund schemes are among the most trusted, government-backed investment instruments in India for retirement planning and long-term wealth creation. The three major provident…
The Public Provident Fund (PPF) is one of the safest and most rewarding long-term savings options in India. Backed by the Government of India,…
The Public Provident Fund (PPF) is a government-backed savings scheme that combines safety, tax benefits, and long-term wealth creation. A common doubt among investors is: Should I invest the full amount at once in April, or spread it across monthly instalments? And how important is the 5th of the month rule?
Let’s break down Annual vs Monthly Deposit in PPF – Which is Better for Higher Returns ? with examples, tables, and comparisons.
If you deposit ₹1.5 lakh on 1st April:
If you deposit ₹1.5 lakh on 10th April:
Suppose you deposit ₹12,500 every month:
Even with proper timing, monthly deposits earn less compared to lump sum, because the full balance is not available from April.
PPF follows a simple rule: Interest is given only on the lowest balance between 5th and last day of the month.
Deposit on or before 5th → earns interest from that month.
Deposit after 5th → earns interest only from the next month.
| Month | If Deposited on 3rd (before 5th) | If Deposited on 10th (after 5th) |
|---|---|---|
| April | ₹10,000 earns from April | ₹10,000 earns from May |
| May | ₹20,000 earns from May | ₹10,000 (April) earns, May deposit from June |
| June | ₹30,000 earns from June | ₹20,000 earns, June deposit from July |
| July | ₹40,000 earns from July | ₹30,000 earns, July deposit from August |
| August | ₹50,000 earns from August | ₹40,000 earns, August deposit from September |
| … | … | … |
| March | ₹1,20,000 earns from March | ₹1,10,000 earns, March deposit from April next year |
Key takeaway: Deposits after 5th lose one month’s interest every time, which reduces overall returns.
Assuming ₹1.5 lakh investment per year at 7.1% annual interest:
| Year | Annual Lump Sum (before 5th April) | Monthly Deposit (before 5th) | Monthly Deposit (after 5th) |
|---|---|---|---|
| 1 | ₹1,60,650 | ₹1,59,100 | ₹1,58,200 |
| 5 | ₹9,25,000 | ₹9,12,000 | ₹9,00,000 |
| 10 | ₹21,50,000 | ₹21,20,000 | ₹21,00,000 |
| 15 | ₹42,00,000+ | ₹40,80,000+ | ₹40,00,000+ |
5th of the month is important in PPF because interest is calculated on the lowest balance between 5th and month-end. Deposits made after 5th don’t earn interest for that month.
You lose one month’s interest on each deposit. Over 15 years, this can reduce maturity by ₹15,000–20,000 compared to deposits before 5th.
Depositing the entire ₹1.5 lakh before 5th April every year gives the highest returns.
Deposit monthly, but always before the 5th of each month.
Yes. PPF rules allow up to 12 deposits in a year, and you can choose lump sum in one year and monthly in another.
The timing of your PPF deposit plays a big role in the returns you get.
This small habit can add lakhs to your maturity amount over 15 years, making PPF one of the most rewarding long-term savings tools in India.