PPF vs FD: Generally there are many investment schemes in the market, but choosing a better scheme can be a difficult task, so even today people trust government schemes like PPF or FD.
Both these schemes are away from market risk. If you also want to invest in any one of the government’s Public Provident Fund Scheme or FD Scheme, then we will tell you which option is better for you.
Public Provident Fund Scheme (PPF)
You can invest in this scheme for 15 years. After 15 years tenure you can extend this scheme 3 times in a block of 5 years. In this you can invest minimum Rs 500 and maximum Rs 1.5 lakh. At present, 7.1 percent interest is being given on the deposited amount in this scheme. In this scheme, PPF pre-mature closure can be done with certain conditions. In this, both your income and maturity amount are tax free under Section 80C of the Income Tax Act, 1961.
Fixed Deposit (FD)
Fixed Deposit (FD) of banks is one of the reliable and safe investment options. In FD you get the facility to invest for 7 days to 10 years. Irrespective of market conditions, you get fixed interest on your deposits. Fixed deposits offer higher interest compared to savings accounts. State Bank of India is giving interest ranging from 3% to 7.10% to the general public and 3.50% to 7.60% to senior citizens.
What is better for you?
If seen from investment point of view, both these options are better. But if we look at the interest rate, currently PPF scheme is giving more interest than FD. If you prioritize long-term retirement savings along with tax benefits, then PPF may be the best option for you. But if you want guaranteed returns along with flexibility then FD is a good option. PPF is a government scheme, it has a locking period of 15 years. If you want to withdraw money after maturity, then this permission is given only after 6 years.