The Public Provident Fund (PPF) mostly flies under the radar of most people looking for good returns for their money. Notably, PPF interest rate is quite high at 7.1 per cent and and the magic of compounding will ensure the money grows at quite a good clip. However, as said earlier, most people are not focused on PPF and instead they eye direct investment in equity or via mutual funds, bank fixed deposits, recurring deposits or even through various schemes rolled out by financial institutions. While these schemes may well be good, PPF has a number of reasons in its favour that must not be ignored. And here we list a number of them.
PPF is a safe instrument
PPF was started by the government of India way back in 1968. And that means the PPF account owner’s money as well as returns are guaranteed by the government.
PPF interest rate
PPF interest rate may not be as high as it once was, but now, at 7.1 percent it is one of the highest available across the long-term and when it is backed by compounding, there is a generous jump in wealth. Do note that the interest rate can be changed by the Finance Ministry.
PPF tenure
PPF tenure is for 15 years and the entire sum invested over the years is locked-in. While the lock-in period may not suit many people, it does ensure that discipline is maintained by PPF account holders and they benefit from it in the form of a big lump-sum payment at the end of this tenure.
PPF extension
While PPF is initially available for 15 years, account holders can extend it in a batch of 5 years over and above that period.
PPF tax saving
PPF is a tax saving tool under section 80c. That means at no time will you have to pay any tax on the money saved through this tool, which is quite unlike bank FDs and many other, more modern, investment avenues.
PPF investment limit
While account holders can invest Rs 150000 every year, there is no compulsion that this limit must be reached. In fact, they can invest as low as Rs 500 every year. Having said that, it is always better to invest as big an amount as possible for an individual in PPF, but it all depends on his or her capacity to save.
PPF loan
PPF account holders can take out a loan against the amount invested, but that can happen only after 3 years of opening it.
PPF – simple tool
There is absolutely no hidden or grey areas in PPF investment unlike the confusing and complex investment schemes that are available in markets these days. All a PPF account holder has to do is deposit the money in as disciplined a manner as possible and enjoy the interest.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend investing, buying or selling shares or subscriptions of any IPO and Mutual Funds. It is prudent for investors to seek guidance from certified professionals prior to finalizing any investment choices.)
PPF interest rate is 7.10%, which will deliver adequate returns over the long-term, but there are other reasons to invest in this safe investment tool. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
