New Delhi: Nowadays, people are looking to invest their money instead of just saving them in bank accounts. Investing their money enables people to grow their wealth as there are different schemes which offer an attractive interest.
When it comes to investment instruments, there are two popular options: The PPF or the Public Provident Fund and the NSC or the National Savings Certificate. Both of them are government-backed schemes, give decent returns and come with their own set of perks. In this article, we will take a look at which is better.
What is PPF?
The full form of PPF, as has been mentioned is the Public Provident Fund and it is a government-backed scheme. Since it is a government scheme, it gives guaranteed returns on investment by dint of an attractive interest. It has a maturity period of 15 years and is mainly availed by those looking to build a retirement corpus by investing for a long time. It is great for those who want to invest for a considerable time without taking any risk and getting steady returns.
What are the benefits of PPF?
The PPF gives an attractive interest rate of 7.1 per cent compound yearly.
The deposits in a PPF account up to Rs 1.5 lakh a year are exempted from tax under section 80C of the Income Tax Act, 1961.
An Indian citizen residing in the country and 18 years or older can open a PPF account.
The PPF is a safe investment option for those who want to invest for a long time without taking any risk and they will also get tax exemptions.
In the PPF, the minimum investment amount is Rs 500 and the maximum investment amount in a year is Rs 1.5 lakh.
What is NSC?
The National Saving Certificate or NSC is a fixed-income investment scheme which is backed by the Government of India. It is a low-risk fixed-income investment and the investors can open the account at the nearest Post Office. It has a fixed maturity period of 5 years and there is no maximum limit on the purchase of NSC.
What are the benefits of the NSC?
Investments in NSC qualify for tax deductions under Section 80C of the Income Tax Act up to the prescribed limit. However, the interest earned on NSC is taxable.
NSC does not have much asset diversity as it is a fixed-income product which is not exposed to equity or market risks.
The maturity period of NSC is 5 years, although there are options to extend for another 5 years.
One can invest in the NSC with a minimum amount of Rs 100, and there is no upper limit of investment. However, the entire amount invested will be locked for five years and premature withdrawals are not allowed.
It must be noted that NSC is accepted as collateral or security by NBFCs and banks for secured loans.
When it comes to investment instruments, there are two popular options: The PPF or the Public Provident Fund and the NSC or the National Savings Certificate. Both of them are government-backed schemes. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
