Interested in investing in PPF? Here’s what you need to know

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The Public Provident Fund (PPF) is a government-sponsored small-savings program administered by the Ministry of Communications. This investment option is popular since it offers a tax benefit and only a small initial expenditure. This plan, according to experts, can be used for regular deposits.

Every year, the Public Provident Fund (PPF) delivers promised returns, however, the precise amount varies. PPF presently pays 7.1 percent interest and is evaluated by the government every quarter. The caveat with this investment option is that you can only put Rs 1.5 lakh in a PPF account in a single year.

PPF is one of the safe fixed-income instruments, according to experts, despite the fact that the annual investment maximum is only Rs 1.5 lakh.

Because of the constant rate of return and predictability of PPF earnings, it is an excellent choice for conservative investors. Financial experts encourage investing in PPF since the maturity amount and overall income generated during the investment period are tax-free.

Along with all of PPF’s benefits, there are a few drawbacks that should not be neglected. For example, because PPF is a long-term investment with a 15-year maturity period, you won’t be able to access the money before 15 years from the date of investment.

If an investor wants to keep their PPF investment after it matures, they can do so for a block of 5 years and so on. An investor can keep their PPF account open long after it has reached maturity without having to make any further contributions. After maturity, the PPF account continues to earn tax-free interest.

Another significant disadvantage of this investment option is the set return. Returns from this investment outlet will not be able to secure one’s invested capital in the event of excessive inflation in the economy, according to industry experts.

Although PPFs typically provide a consistent rate of interest, market-linked products such as stocks and mutual funds are known to yield higher returns, according to experts. For higher returns, risk-takers may consider investing in equity-linked instruments such as stocks and equity-oriented mutual funds, according to experts.

It should be noted that certain investments contain higher risks and, as a result, should be carefully considered as well as risk tolerance levels.

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