Investing in Public Provident Fund (PPF) to secure your financial future? A PPF is a long-term investment, offering tax benefits and providing guaranteed returns. It also allows you to accumulate wealth over the years while taking advantage of lower market volatility.
Investing in PPF yearly can help create a strong financial base for your and your family’s future needs. In this blog post, we’ll discuss why it makes sense to invest in PPF every year, how it works and how you can get started. Read on to explore all that investing in PPF annually has to offer!
Table of Contents
What is PPF and what are its benefits
The Indian government offers a long-term savings plan called Public Provident Fund (PPF). It is a tax-advantaged investment choice with enticing interest rates.
Benefits of PPF include:
Tax advantages: Section 80C of the Income Tax Act entitles contributions to PPF to tax deductions.
Guaranteed returns: PPF is a government-backed scheme, which means that the returns are guaranteed.
Long-term investment: The minimum investment period for PPF is 15 years, making it a suitable option for long-term savings.
Safety: PPF is considered to be one of the safest investment options as it is backed by the government.
Partial withdrawal and loan facilities: After the completion of the sixth financial year, the PPF account holder can withdraw up to 50% of the balance at the end of the 4th year preceding the year of withdrawal. Also, a loan can be availed between the 3rd and 6th financial year.
Maturity: The maturity period of PPF is 15 years, which can be extended in blocks of 5 years.
Interest rate: The interest rate on PPF is revised every quarter, it is generally higher than the interest rate offered by other fixed deposit schemes.
Nomination facility: PPF account holder can nominate a person to receive the amount standing to the credit of the account in the event of the death of the account holder.
It is worth noting that the PPF account can be opened in any authorized bank or post office and the contribution towards the PPF account can be made in cash, cheque, or demand draft. The annual contribution limit is capped at INR 1.5 Lakhs and the interest rate is determined by the Government of India every quarter
How to invest in PPF?
Investing in mutual funds can be an intimidating and complex process. However, investing in Public Provident Funds (PPFs) is a relatively straightforward procedure. To get started, one should begin by researching the PPF options that are available and assessing their goals and risk tolerance.
Additionally, it is important to identify any mutual fund investments that may be suitable for the individual’s long-term objectives. Once a suitable mutual fund investment has been found, one can calculate the returns of their investment in PPF using an online ppf calculator.
This will help them understand how their mutual funds are performing over time, so they can make intelligent decisions about when to buy, sell or reinvest for maximum returns. Ultimately, as long as savers do their homework with research and use a reliable PPF calculator before making an investment decision, investing in mutual funds through PPFs should provide safe and profitable portfolio growth over the long term.
Is it good to invest 1.5 lacks in PPF every year?
Investing 1.5 lacks in Public Provident Fund (PPF) annually can be a good savings and investment option for some people, but it depends on your overall financial goals and situation. Here are some things to consider:
Tax benefits: One of the main benefits of investing in PPF is that contributions are eligible for tax deductions under Section 80C of the Income Tax Act. If you are looking to save on taxes, investing the maximum annual limit of 1.5 lacks in PPF can be a good option.
Guaranteed returns: PPF is a government-backed scheme, which means that the returns are guaranteed. This can provide a sense of security for those looking for a low-risk investment option.
Long-term investment: The minimum investment period for PPF is 15 years, making it a suitable option for long-term savings.
Safety: PPF is considered to be one of the safest investment options as it is backed by the government.
Interest rate: The interest rate on PPF is generally higher than the interest rate offered by other fixed deposit schemes.
Maturity: The maturity period of PPF is 15 years, which can be extended in blocks of 5 years.
Conclusion
However, it’s worth noting that 1.5 lacks may be a large amount for some people to invest annually, and it may be more beneficial to invest in a diversified portfolio of investments to spread out risk. Additionally, you should consider your overall financial goals and risk tolerance before making any investment decisions. It is always beneficial to consult a financial advisor for personalized advice. Want to learn more about PPF or mutual fund investment go to LICMF, Be a Smart Investor.
