Public Provident Fund (PPF) is one of the most popular and preferred investments, especially among those looking for long-term savings goals. But how does PPF measure up compared to other options such as a Fixed Deposit (FD)? Is it offering better returns than FDs? And if you invest in PPF for 15 years, what kind of return can you expect? These are just some of the questions we will answer in this blog post, where we take a look at whether or not investing your money in PPF through SIP is worth it.
What are PPF and FD
PPF (Public Provident Fund) and FD (Fixed Deposit) are two popular options for investment in India. PPF is a long-term investment option offered by the Government of India, which allows an individual to save money for 15 years, along with tax benefits. On the other hand, fixed deposits are offered by various financial institutions like banks and non-banking financial companies (NBFCs).
These deposits provide investors with limited liquidity and higher interest rates than savings accounts. If you’re looking to invest in either of these instruments, it’s best to use a ppf calculator to ensure you make the right decision based on your personal investment goals.
How PPF works
PPF (Public Provident Fund) and FD (Fixed Deposit) are two popular options for investment in India. PPF is a long-term investment option offered by the Government of India, which allows an individual to save money for 15 years, along with tax benefits. On the other hand, fixed deposits are offered by various financial institutions like banks and non-banking financial companies (NBFCs).
These deposits provide investors with limited liquidity and higher interest rates than savings accounts. If you’re looking to invest in either of these instruments, it’s best to use a PPF calculator to ensure you make the right decision based on your personal investment goals.
Advantages of PPF over FD
Investing in Public Provident Fund (PPF) can be a great way to achieve your long-term investment goals. With the help of PPF calculators, investors can easily ascertain how much they need to save each month as well as get an estimate on the return over a specific period. The PPF offers better returns than most bank fixed deposits while also providing tax benefits and government security. Investors have the flexibility to choose the amount and tenure of their investments.
Furthermore, investors have access to many mutual fund company that offer safe and rewarding investment opportunities through the PPF account. Overall, investing in PPF is one of the safest and smartest financial decisions that an individual should make for their prospects.
Disadvantages of PPF over FD
A major disadvantage of PPF (Public Provident Fund) compared to FD (Fixed Deposit) is that the returns are much lower. The amount earned on PPF is tax-free, although higher amounts cannot be achieved through it. Moreover, there is limited liquidity with PPF accounts as one can withdraw only after a gap of 5 years, whereas in FD schemes funds can be withdrawn any time after fixed tenure.
Furthermore, the ppf calculator tool available for calculating the returns is not very user-friendly and investors have to manage the account on their own which may be difficult due to lack of knowledge. An investor looking for higher returns should opt for other investment options available in the market such as mutual funds operated by reputed mutual fund companies; however, certain risks are also associated with these options.
Is PPF better than FD? which to choose PPF or FD?
Deciding whether to invest in Public Provident Fund (PPF) or a Fixed Deposit (FD) can be a tricky choice as both offer relatively low-risk investments with attractive returns. As an investment, PPF provides tax benefits and is highly liquid compared to FDs. It also offers tax-free returns, which makes it a great option for long-term investors looking to save on taxes. However, FDs provide better returns than PPFs and there is no maximum limit on the amount that can be invested. Another advantage of FDs over PPFs is that they can be used as collateral for loans. Ultimately, whether you should choose PPF or FD depends on your financial goals and risk appetite. If you are looking for stability and guaranteed returns, then FDs might be a good option; however, if you prefer liquidity, tax savings and deductions, then opting for PPF would be a wiser decision.
Final thoughts
Sticking to PPF for the long term is a safe investment option with guaranteed returns. Even though FDs may offer higher interest rates in the beginning, they are not as stable as PPFs and there is always a risk of losing your money. If you are looking for a long-term investment option that will give you guaranteed returns, then PPF is the way to go!
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