With the beginning of FY 2026-27, it becomes important for investors to review their portfolio. Especially regarding traditional investment option like Public Provident Fund (PPF), the question is being raised whether it is as beneficial even today as it was believed earlier.
Big feature of security and tax saving
PPF has always been considered a safe investment, because it is backed by the government. In this, there is no impact of market fluctuations and the returns remain stable. Also, it comes under EEE category, that is, investment, interest and maturity – all three are not taxed. This is the reason why it has been the first choice of investors for a long time.
Big fund is gradually formed through compounding.
PPF has the benefit of compounding, that is, the interest received every year earns further interest. This can create a good fund over a period of 15 years. After this, there is also an option to extend it for another 5 years, due to which the investment can become stronger.
Returns limited compared to inflation
Although the interest on PPF is currently around 7.1%, but with the inflation rate remaining at almost the same level, the actual return is not much. In such a situation, this investment is considered better for keeping the money safe rather than increasing it.
Liquidity and investment limits become a challenge
PPF has a lock-in of 15 years, due to which it is not easy to withdraw money when needed. Also, only a maximum of Rs 1.5 lakh can be invested in it annually, which may prove to be low for many investors.
PPF in changing role
There are now options like mutual funds and SIP available in the market, which can give higher returns, but the risk is also higher. In such a situation, PPF is now being seen as a balancing tool, which provides stability to the portfolio. PPF has not become completely irrelevant in 2026, but its role has changed. The better strategy is to use it in combination with other investment options, so that both security and better returns can be achieved.