VPF Calculator

What is a VPF Calculator?

A Voluntary Provident Fund or VPF calculator is a financial tool that helps employees calculate their retirement corpus, which includes both the amount saved by an individual and the returns earned throughout the investment duration. You need to provide a few details such as VPF investments made, VPF interest rate, which is announced by the government of India every quarter, duration of investment in years, and the frequency of investment; once you enter the details, you will get the expected maturity amount of your Voluntary Provident Fund Account.

How Can VPF Calculator Help You?

A voluntary provident fund calculator can help you in the following manner:

1. Retirement planning: A VPF calculator helps you plan your retirement by providing a clear picture of your savings.
2. Comparison: Using the estimated total amount, one can easily compare other investment options with VPF.
3. Compounding Effect: The VPF calculator includes the compounding effect and shows how your savings can grow over time.

How Does a VPF Calculator Work?

The explanation of how a Voluntary Provident Fund works is as follows:

1. Input Data: The first step is to provide the data that is required to calculate the total maturity amount in the VPF account. The inputs include VPF contribution amount or investment amount, frequency of contribution, duration of investment, and current VPF interest rate.
2. Application of Formula: Once the inputs are entered, the formula to calculate the maturity amount in the VPF account is applied.
3. Output: The output in the form of the total investment, total interest earned, and total maturity amount at the end of the investment duration, which will be calculated based on the inputs provided by the user.

Formula to Calculate VPF Calculation

The formula to calculate the voluntary provident fund account balance is as follows:

A = P * (((1 + r) ^ t) – 1) / r) * (1 + r)

Where:

• A = VPF Maturity Amount
• P = Yearly VPF Contribution
• r = Annual VPF Interest Rate
• t = Number of Years or Investment Duration

Note:

The calculator automatically converts the monthly, quarterly, or half-yearly contributions into yearly VPF contributions before using the formula.

Other metrics are calculated in the following ways:

• Total Investment = VPF Investment * ( Investment Duration * f )Note: f = 1 for yearly, 2 for half yearly, 4 for quarterly, and 12 for monthly.
• Total Interest Earned = VPF Maturity Amount – Total Investment

Example of VPF Calculation

Now, let’s understand the voluntary provident fund calculation with an example:

Mr. A contributes ₹10,000 per month to his Voluntary Provident Fund account and gets an annualized return of 8.1%; he wishes to continue his investment for 15 years.

Now, he wants to know the amount that he will get on maturity; for this, he uses Pocketful’s VPF calculator. He needs to enter the following details:

• VPF Investment Amount
• VPF Interest Rate
• Investment Duration in Years
• Frequency of Investment

As he entered the details, the formula to calculate VPF will be applied:

A = P * (((1 + r) ^ t) – 1) / r) * (1 + r)

where,

P = 10,000 * 12 = ₹1,20,000
r = 8.1%
t = 15

Putting the value in the formula.

A = 1,20,000 (((1 + 0.081)^15) – 1) / 0.081) * (1 + 0.081) = ₹35,49,705.69

Outputs are:

• Total VPF Maturity Amount = ₹35,49,705.69
• Total Investment = 10,000 * 15 * 12 = ₹18,00,000
• Total Interest Earned = ₹35,49,705.69 – ₹18,00,000 = ₹17,49,705.69

How to Use Pocketful VPF Calculator?

The steps to use the Pocketful’s Voluntary Provident Fund Calculator is as follows:

1. The first step in using Pocketful’s VPF calculator is to visit the Pocketful website.
2. Once the website’s home page is opened, you simply need to scroll to the bottom of the page, where you will find the tools section.
3. As you click on the tools button, a new page will open where you can find a tab named “Financial Calculators”. Just click on it.
4. A new page will open where you can see the VPF or Voluntary Provident Fund Calculator; just click on it.
5. To get your maturity amount, you need to provide a few inputs, such as VPF investment amount, frequency of investment, VPF interest rate, and investment duration.
6. As soon as you enter the details, you will get your Total VPF maturity amount along with the Total Investment made and Total Interest Earned during the investment duration.

Benefits of Using the VPF Calculator

The significant benefits of using the VPF calculator are as follows:

1. Quick Calculation: The VPF calculator helps you accurately and quickly calculate the maturity amount in the VPF account.
2. Financial Planning: A voluntary provident fund calculator helps you calculate your retirement corpus based on your regular contributions or investments.
3. Comparison: Through the VPF calculator, one can change the investment frequency, such as monthly, half-yearly contribution, etc., to analyze different scenarios and compare them with other investment opportunities to make better investment decisions.