If you have wondered, “are PPF investments good?” then a careful analysis of your reason for investing can help you find the answer. You might also be wondering, “is PPF relevant in the age of cryptocurrencies?”
To know more about PPF, let's understand PPF investments, how to open a PPF account and how to invest in PPF in detail.
PPF was floated by the Government of India to encourage people to save money for the long term. It is backed by the Government of India and can be considered among safe investments. Providing interest higher than bank fixed deposits is one of the aims of PPF. Moreover, to further promote investing in a PPF investment plan, the government has made PPF principal and interest tax exempt.
A PPF investment plan is designed to be a long-term one. The initial tenure for a PPF account is fifteen years. After the initial fifteen years tenure, it can be extended to five years.
You can open a PPF account from a bank which offers a PPF account facility. You may even open it from the post office. You may use either online or offline modes for opening a PPF account.
A Public Provident Fund (PPF) account is exclusively available for opening at specific bank branches, including those of:
To initiate the online procedure for opening a PPF account, you'll need an active savings account with a participating bank or Post Office, and internet banking or mobile banking activated for the same.
Here's a step-by-step guide for the online method:
The offline method involves the following steps:
Feel free to choose the method that best suits your convenience and needs.
The following documents are required to be produced to open a PPF account:
As such, the withdrawal period for PPF is after fifteen years of account opening. However, you may be allowed partial premature withdrawal after five years of account opening.
Up to 50% of the balance of the preceding year can be withdrawn once in each financial year after five years of account opening.
You may avail of a loan against your PPF account between the third and fifth years. You can avail a loan of up to 25% of your account balance at the end of the year before. If you repay the first loan, a second loan can be taken till the 6th year.
PPF is a long-term conservative investment yielding returns higher than bank fixed deposits. It is backed by the Government of India. The principal invested, the interest earned, and the final withdrawal amount are income tax exempt. You can open a PPF account at a bank which offers a PPF account facility or at the post office.
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You can invest in PPF at a branch offering a PPF account facility or the post office. You can use both the offline and online modes of account opening. Choose a mode that suits you best.
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PPF is a long-term conservative investment yielding returns higher than bank fixed deposits. It is backed by the Government of India. The principal invested, the interest earned, and the final withdrawal amount are income tax exempt. Very few investments enjoy such generous tax exemption benefits. You can open a PPF account at a bank which offers a PPF account facility or at the post office.
All of these taken together are a very attractive package for the conservative, risk-averse or even the moderate, risk-neutral investor. It is a good idea to invest in PPF if you are looking for a long-term, safe, convenient, tax-exempt investment avenue which offers interest rates better than bank fixed deposits.
Interest is calculated every month in a PPF account. It is computed based on the lowest balance held in the account between the fifth day of the month and the last day of the month.
Interest is credited to the PPF account at the end of each financial year.
Got your PPF amount after maturity? Want to boost your investments even further? You can consider investing it in mutual funds with the Fi money app. Make informed investing decisions with extensive investment knowledge and insights at your fingertips.
How much you will make after investing in a PPF for 15 year entirely depends on the amount you invest. The current PPF rate is 7.1%, you can calculate your earnings keeping this rate in mind.
Some disadvantages of PPF are -