Why PPF is A Good Investment?

When it comes to investment and obtain high returns, investing in public provident fund (ppf) is one of the top choices. PPF is a government-backed savings scheme in which you need to invest for a long term and get guaranteed returns basis of applicable interest rate. PPF investment comes with an interest rate of 7.1% per annum, which is revised quarterly and compounded annually.

PPF investment is aimed to fulfil various long-term financial goals such as children’s higher education & marriage, buying home, corpus for retirement, etc. While you are earning, it is a prudent move to begin investing in the early stage, so that you can accumulate a huge corpus to meet various financial obligations in your life.

How to Open a PPF Account?

You can simply open a PPF account with a post office branch or a designated bank branch. For opening an account, you need to submit documents such as identity proof, address proof, pan card, etc.

Top Reasons to Invest in Public Provident Fund

1. High Rate of Interest

By investing in a Public Provident Fund account, you get the guaranteed returns with a fixed rate of interest. The current rate of interest on PPF is 7.1% per annum. The interest rate in this investment scheme is changed quarterly and compounded annually. With the high rate of interest, you can easily accumulate a corpus by investing for a long-term of 15 years. The interest rate available in this investment is far more better than a bank’s fixed deposit interest rate.

2. Accumulate Huge Corpus

As you need to invest continuously for a lock-in period if 15 years, you can take the benefit of power of compounding. It helps to accumulate a huge corpus at its maturity. The accumulated PPF amount facilitates you to meet numerous financial goals. So, by investing in this government-run scheme, you need not to worry about your future’s financial security.

The maturity period of PPF investment is 15 years, however it can be extended to 5 more years by submitting a requisite application to the branch.

3. Small Amount for Investing

When it comes to investing, you can start from a small amount of Rs. 500 and the maximum amount you can invest during a financial year in PPF is Rs. 1.5 lakh. You are required to keep investing a minimum amount during a year to remain your account in active state.

4. Partial Withdrawal Facility

This investment option comes with the partial withdrawal benefit. You can withdraw up to a maximum of 50% of total amount in the account at the end of 4th financial year or previous year. You can make withdrawals from 6th year from the date of account opening. It helps meet your emergency financial requirements. Considering it as a long-term investment option, it provides sufficient liquidity.

5. Loan Facility

You can get loan against your PPF balance and you can avail from 3rd year onwards till 6th of investment. The rate of interest for obtaining such loan is 1% and you have the flexibility to repay it during 36 months from the date of loan approval.

6. Tax Benefits

Investing in this savings scheme offer exempt-exempt-exempt tax benefit status. The amount you invest in PPF up to Rs. 1.5 lakh during a financial year qualifies for tax deduction under section 80C of the Income Tax Act, 1961. Interest earned in this investment is exempt from tax. The amount accumulated at maturity is also tax-free.

Conclusion

When you are looking for a better investment option that offer high returns along with safety of capital amount, then choosing PPF is a right option. It offers high interest rate, so you will accumulate a corpus amount at the maturity.