PPF remains the Number 1 choice for investors

In the current era, there are many high-return investment options available such as shares, mutual funds, and fixed deposits. Amidst all these, Public Provident Fund, or PPF, remains people’s top choice. The reason for this is- one scheme, multiple benefits! Actually, PPF is an option for savings, that comes with several benefits. First – guaranteed interest rate. Second – it is effective in saving taxes. Third – it is helpful in accumulating money for retirement. Let’s learn more about the various benefits of PPF.

Firstly, there is the guarantee of security. PPF, or Public Provident Fund, is a government scheme. The interest rate on PPF is determined by the government. The government reviews the interest rate quarterly. Due to being a government-backed scheme, it is more secure compared to shares, mutual funds, and even bank FDs. Currently, PPF offers an annual interest rate of 7.1%. Interest on PPF is calculated on a monthly basis. At the end of the financial year, the interest is added to the deposited amount, and then interest is calculated on the new remaining amount. PPF is a very low-risk scheme with guaranteed interest.

You can start investing in PPF with a small amount. In a PPF account, you can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh per financial year. You can deposit money in PPF every month, similar to mutual fund SIP. This means, you can deposit ₹500-1000 every month into your PPF account. Besides, there is also an option to deposit money every three months, six months, or annually. PPF account can be opened either by visiting the bank branch or online.

There is a double benefit in PPF. On investing in PPF, a tax deduction claim of up to ₹1.5 lakh can be made under Section 80C of the Income Tax Act. In simple terms, for every year you deposit money in PPF, you can reduce tax liability by subtracting that amount from your earnings. PPF falls under the EEE category, meaning, not only is the invested amount eligible for tax deduction, but the interest earned and the entire amount received at maturity are also completely tax-free.

PPF is also a good means of saving for retirement. This is because it has a lock-in period of 15 years, which encourages long-term saving and also benefits from compounding. The maturity of a PPF account is 15 years, but you can extend it further by 5 years gradually until retirement if you wish to.

From the perspective of long-term investments such as adding money for retirement, children’s education, PPF is a good option. It should definitely be a part of your investment portfolio. The sooner you open a PPF account, the better. The only limitation is that you cannot invest more than ₹1.5 lakh in a year.