When it comes to safety of money and good returns, then investment options like PPF (Public Provident Fund) and FD (Fixed Deposit) are more preferred. Both these investment gives stable and safe returns in the long term, as well as the benefit of tax savings. But the question is, which is better for you? Let’s understand…
PPF and FD: Both safe
PPF is an investment especially designed for long periods. In this, the money remains locked for at least 15 years and the government keeps its interest completely safe. So if you want to increase your money for a long period and also want to save tax, then PPF is good for you.
At the same time, you invest outright amount in fixed deposits, which you can keep from many months to a few years as per your convenience. Your money in FD can also be withdrawn quickly.
Deposit amount and date of investment
Every year you can deposit at least 500 rupees in PPF, but the maximum annual deposit is limited to Rs 1.5 lakh. Also, its duration is 15 years, which you can increase after 5-5 years. On the other hand, you can start investing with a small amount in FD and there is no upper limit.
Difference on tax savings and interest
Whatever interest is received in PPF is completely tax-free. Also, you can save tax on deposits up to Rs 1.5 lakh under Section 80C. FD also contains some special tax-saving FD for tax savings. But the interest on FD is generally taxable and TDS (Tax deduction at source) is also deducted on it.
Evacuation and liquidity
When it comes to money, it is also necessary to withdraw money. In PPF, you do not have the freedom to withdraw money for 15 years. However, after the 7th year, you can do partial withdrawal or also take the Against loan of your PPF account. At the same time, you can withdraw money before maturity in FD.
Interest rate and return
The government decides the interest rate on PPF, which is usually slightly higher than the FD and it is updated every three months. Interest is deposited according to the annual campound, which increases your money in a long time. The interest rate on FD depends on the bank and it varies according to the period.
Which option to choose?
If your priority is safe investment and tax savings for a long period, then PPF will be better for you. This will help in increasing your money. At the same time, if you want to invest for a short time in which money can be withdrawn quickly and you get fixed returns, then FD is the right option.