What is the Public Provident Fund ( PPF ) and its Features?

Investment is the most important part of our life, If you’re not saving for the future then you are taking big in your life. People are asking, ” What are Public Provident Fund ( PPF ) and its features. If you are also looking for the same then stick to this article until the end.

I hope you all are aware of the importance of investing or saving. This is the back bone of us in old age. This knowledge is given by our ancient people.

In today’s modern world, We should do investment. As you all are aware due to coronavirus many people have not got the food on time. So, I want to tell you that “Investment can back you in the bad time“.

What is the Public Provident Fund ( PPF )

Public Provident Fund ( PPF ) is a popular investment scheme in India among investors due to its multiple investor-friendly features and associated advantages. It is a long term investment. It comes in safe investment options with high returns in India.

Some of you did not know about PPF, But you should know about it. It can give you good returns on the investment. Investors can also undertake the PPF regime to diversify their financial and investment portfolio.

Features of Public Provident Fund PPF.

The characteristics of Public Provident Fund are as follow:

Investment tenure

In Public Provident Fund ( PPF ) you should keep your investment for 15 years. A PPF account has a lock-period on your investment of 15 years, Before the period the investment cannot be withdrawn completely.

If you are ready to invest your money for 15 years then these funds can create wealth for you. An investor can choose to the extent his tenure from 15 years to 20 years ( Add 5 years ), But after the lock-period is over then only and required.

Minimum and maximum investment amount.

A minimum amount is RS. 500 and the Maximum amount is Rs 1.5 Lakhs that you can invest in a Public Provident Fund Scheme annually. These investment funds can be undertaken by paying the lump sum or installment basis.

However, An individual is eligible for only 12 yearly instalment payment into a PPF account. Investment in the PPF account as an annually basis to ensure that the account remains active.

Loan against Investment

Public Provident Funds provide the benefits of availing loans against the invested amount. However, the Loan will only eligible if you are taking at any time from the beginning of 3rd year till the end of the 6th year from the date of activation of the PPF account.

The maximum tenure of such type loans against PPF it can be around 3 years, But only 25% or less of the total amount available from the account can be claimed for this purpose.

Interest on amount

the interest on the Public provident fund (PPF ) is determined by the government of India. It aims to provide higher returns on investment. It is maintained by various commercial banks.

The rate of interest can be around 7.9%. and it is subject to quarterly updates at the discretion of the government. So, the interest on investment around 8% is good return on investment with safe and risk free investment.

The Benefits of investing in PPF?

PPF ( Public provident fund) is a popular and most trending investment scheme in India. So, let’s checkout the benefits of investing in PPF account.

Tax benefits

An investor also thinks about tax, How much tax is payable on the capital investment.PPF is an investment instrument that enjoys the benefit of the EEE ( Exempt -Exempt-Exempt ) tax model, Under section 80c.

According to the EEE tax model, the tax is not applicable if your investment amount is up to 1.5 Lakh. If your investment goes up from 1.5 Lakh, tax is applicable to your investment ( The tax will be normal ).

Safe investment

The Public Provident Fund is backed by the government, The government-backed scheme has ensured and trusted by the people. Therefore, It comes in a safe investment.

The interest of PPF is not dependent on market volatility. So, It ensures that the rate of interest on investment is risk-free. Therefore, It means this Fund comes in Low risk, High return investments.

PPF loans benefits

Public Provident Funds provide the benefits of availing loans against the invested amount. However, the Loan will only eligible if you are taking at any time from the beginning of 3rd year till the end of the 6th year from the date of activation of the PPF account.

The maximum tenure of such type loans against PPF can be around 3 years, But only 25% or less of the total amount available from the account can be claimed for this purpose.

Flexibility in deposit

You will get flexibility while deposit amount PPF account, Which can be done by installment or lump sum, and the minimum deposit is only Rs 100 and the maximum installment you can deposit is 12.

To maximize the benefits of investment then you should deposit your installment before the 5th of every month.

Higher interest rate

The PPF provides higher returns on investment than different risk-free investments. If you are investing in Fixed Deposit ( FD ), Then my advice is to invest in PPF because as compare to FD it gives high returns.

Last word from Mini invest

I hope you have understood what is Public Provident Fund and its Features. According to me investing in PPF is best if you are looking to invest in risk-free investment. If you have any recommendation or feedback then you can write it in the comment box below.

Give your Feedback, Comment and recommendation