What is better PPF or mutual funds? (2024)

What is better PPF or mutual funds?

Mutual funds vs PPF – both are good investment options, but they have different features and benefits. PPF is a low-risk investment option with a lock-in period of 15 years. While mutual funds are a market-driven vehicle and have no lock-in period (Except ELSS funds).

Why is PPF not a good investment?

2) Long lock-in period

Amit Gupta, MD, SAG Infotech said PPF's long lock-in period of 15 years, makes it unsuitable for short-term needs. “Investors might have to consider other solutions if they have any immediate needs," said Khandare.

What are the disadvantages of PPF?

Which is best investment PPF or SIP?

The choice between SIP and PPF depends on your financial goals and risk tolerance. Which Gives Higher Returns: SIP OR PPF? SIP (Systematic Investment Plan) in mutual funds has the potential for higher returns than PPF (Public Provident Fund) over the long term, but it also carries higher market risk.

Which is better mutual fund or EPF?

The clear conclusion here is that for longer holding periods, investment in mutual funds has beaten EPF in all cases where data is available.

How risky is PPF?

Risk-free, guaranteed returns: The Public Provident Fund is backed by the Government of India. So, one of the most significant PPF account benefits is that it is entirely risk-free. The returns, too, are guaranteed by the government.

What happens to PPF after 15 years?

As a rule, one can fully withdraw the PPF account balance only upon maturity, i.e. after the completion of 15 years. Upon completion of 15 years, the entire amount standing to the credit of an account holder in the PPF account along with the accrued interest can be withdrawn freely and the account can be closed.

What is the best time to invest in PPF?

Therefore April is the best month to invest in PPF since that will always give the highest interest. However, over a 15-year period, the difference between investing ₹1.5 lakhs/year and investing ₹12,500/month is only ₹40.68 lakhs minus ₹39.45 lakhs or just ₹1.23 lakhs.

How much should you invest in PPF?

The maximum amount you can invest in a year is Rs. 1.5 lakh annually. The minimum you can invest in a PPF account is Rs. 500 annually. Compounding of interest occurs once every year at the end of the financial year. The maturity of PPF account is in 15 years and the proceeds are completely tax-free.

Who should invest in PPF?

A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this plan is mandated by the government, it is backed up with guaranteed returns to protect the financial needs of the masses in India. Further, invested funds in the PPF account are not market-linked either.

Is PPF tax free?

Deposits to a PPF account are exempted from the taxation up to a maximum of Rs. 1.5 lakh in a FY under Section 80C of the Income Tax Act, 1961. A Tax saving fixed deposit has a higher interest-earning potential than savings accounts. The second exemption is on the interest earned from your PPF deposits.

Can I deposit more than 1.5 lakh in PPF?

According to PPF rules, an individual can open one account for themselves and one account for each minor child. The maximum contribution allowed is ₹1.50 lakh in total for all accounts.

How can I invest smartly in PPF?

If you deposit money early in the month you would get the advantage of interest added on the contribution before 5th of the month. You can also invest a lump sum on or before 5th April of a year in order to get the interest for the whole year.

What is better than mutual funds?

ETFs can reflect the new market reality faster than mutual funds can. Investors in ETFs and mutual funds are taxed based on the gains and losses incurred within the portfolios.2 ETFs engage in less internal trading, and less trading creates fewer taxable events.

Why LIC is better than mutual fund?

The more viable choice between LIC policy and MF will depend on the investment needs of the individual. If an investor is more focused on creating wealth in the long run, mutual funds can be better. If the motive of the investment is to secure the future of one's family, life insurance can be a more beneficial choice.

What is the safest type of mutual fund?

Money market mutual funds = lowest returns, lowest risk

They are considered one of the safest investments you can make.

Who Cannot invest in PPF?

Eligibility: Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can't open a joint account or one for a Hindu Undivided Family (HUF). Also, an individual can have only one account in his name.

Which bank is best for PPF?

Can I withdraw money from PPF?

Completion of seven years: According to PPF partial withdrawal rules, you can withdraw up to 50 percent of the amount in your PPF Account after seven years, starting from the end of the year you made your first contribution. You can make only one partial withdrawal each year.

Can NRI continue investing in PPF?

As an NRI: You can continue to invest in the existing PPF Account, i.e., the account opened when you were a Resident Indian. You cannot open a new PPF Account after becoming a Non-Resident Indian. You must close the account after the 15 years maturity period.

Can I have 2 PPF accounts?

No. Only one PPF account can be maintained by an individual, except for an account that is opened on behalf of a minor.

How can I maximize my PPF return?

How to Maximize PPF Returns? Invest before the 5th of every month. PPF interest is calculated on the lowest balance between the 5th and last day of every month. For instance, if you deposit Rs 10,000 on 2nd Jan and another Rs 10,000 on 15th Jan, the interest will only be calculated on Rs 10,000 and not Rs 20,000.

Can I deposit 1.5 lakh each in my PPF account and child's account?

As per paragraph 4 of the scheme, an individual can contribute no more than Rs 1.5 lakh to his and the minor child's accounts taken together in a year. So while contributing to your account, you can also contribute to the PPF account of your minor son.

What happens if I don't deposit in PPF?

If you miss the PPF account minimum annual deposit requirement of Rs. 500 altogether it will lead to account deactivation. In such cases, you can reactivate the account by paying a penalty of Rs. 50 plus Rs.

What if I invest 5000 in PPF for 15 years?

If you invest Rs. 5000 in PPF for 15 years at an interest rate of 7.1%, you will get Rs. 1,35,607 at maturity.