Save Your Money By Investing in PPF or Fixed Deposit (FD)?

Investing in true different modes is too common nowadays. People want to invest money to get good returns. But the new investors get confused between Fixed Deposits and Public Provident Fund (PPF or FD). They almost get confused due to the suggestions of family and friends. Therefore, a little knowledge about both is necessary to know which is best to invest for you. While testing anywhere one has to acquire the basic knowledge so that they could properly invest the money.

To lower the risk-averse investors one has to know the below given following things properly. Hence, we are going to discuss the difference between the FD and PPF account and how can you invest in them.

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Fixed Deposit (FD)

  • It is also known as the term deposits and is a very old and popular mode of investing in the banks in India. In a fixed deposit, the investor will get a fixed rate of interest on his or her investment, which eventually solves the agenda of earning good money for the investor
  • There are few types of FD namely- FD in a bank, FD with the sweep-in facility, Flexi deposit and so on.
  • One can also choose whether they want to get the interest at the maturity time that is cumulative or they want to get an interest on a monthly or quarterly basis that is non-cumulative.

Benefits of Having an FD in Bank

  • One can easily book FD through open online modes in a few minutes as most of the banks are providing this facility.
  • A person will get a higher rate of interest for keeping their money than the normal interest they are getting from a savings account.
  • There are no market-linked instruments that are there is no risk factor as the returns are fixed.
  • People are getting encouraged to save their money through these FD’s.
  • One even has a chance to select the tenure according to their need.
  • One can have multiple FD is in multiple banks at a single time.
  • Even some of the banks are giving the loan to the person who is carrying FD with a bank.
  • One can anyone withdraw the money of FD before its maturity date but a penalty has to be paid.

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Public Provident Fund (PPF)

  • It is also the most popular investment method in India. It is a scheme launched by the central government under the PPF act of 1968. The individuals who are self-employed or working in an unorganized sector will get a long term savings scheme in the name of PPF to get an assistant in their retirement period.
  • If you are having a good decent tax free rate in Returns and you are enjoying the tax benefits then PPF is made for you.
  • The investments over the PPF accounts always get a tax free interest.
  • It is also said that PPF enjoys EEE status from the side of income tax.

Features and Benefits of PPF

  • An applicant has to be a permanent resident of India how to apply for PPF.
  • There is no entry age for PPF as a minor can also invest through the guardian.
  • The interest in your investment is 7.8 % per annum.
  • The tenure period of the PPF is 15 financial years which includes the first year of Investments but a person has a choice to extend the account in the block of five years. That is if in 2019 your policy has completed its 15 years than now you can extend your policy for the next five years that is till 2024.
  • One has to invest at least 500 rupees annually.
  • The maximum limit for the investment is 150000 per annum.
  • The tax is exempt as per section 80c up to 150000.
  • One can invest through different online modes for offline modes, for example, cash, cheque, demand draught, and pay order, online transfer in favour of account officer.
  • One can also give a nomination on behalf of him or her who is eligible to get the amount after tenure.

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Differentiation Between The PPF and The FD

After knowing about both PPF and FD now we will know about their differentiating factors.

  • Interest Rate: Right now the interest rate in most of the banks on FD is 5% to 7% per annum weather, on the other hand, PPF is currently carrying 7.8 % interest rate per annum. The rate of PPF is subjected to change every three months.
  • Maturity Period: There is no maturity period for the bank FD’s but in the case of PPF, your money gets blocked for the first initial 5 years and after that, till the maturity period is 15 years. But you can wait for 15 years then this is a golden chance to get the sent rate of interest along with the tax benefits.
  • Premature Withdrawals: In case of emergency, one can withdraw their FD is from the banks at 0.5 to 1% lower rate of interest hence this can help them in the emergency period. But one needs to apply with form C for the withdrawal from PPF and one cannot make more than a single withdrawal in a single financial year. Even one can only make the withdrawal all eligible to withdraw money after 5 years once you have invested.
  • Loan Benefits: One can avail loan of up to 80 to 90% for your fixed deposit are most of the banks are offering this. The interest over the loans taken upon FD is lower than a normal personal loan. On the other hand, the loan facility on the PPF account is also available but one can take the loan after the completion of 3rd year once you start investing in a PPF account.

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Which is Better – FD or PPF?

Both the modes of investments are worthy and one can invest without any risk of losing money.

  • The liquidity in the case of FD is easy but not in the case of PPF. But before investing in FD you have to go through all the terms and conditions which are a bank is having us this can eliminate the hassle.
  • Once you start investing in PPF the security of the money is more and this is a long term investment to get a good return.
  • Hence, on both hands both PPF and FD have their advantage that is if you want a long term investment then you can go for PPF and if you want a short term or any time withdrawal investment and you can go for FD.
  • Now, depending on the choice and need of the investor that which one is suitable for them. We just have to mention that before selecting any investment method just go to all the terms and conditions and other investment objectives of the same.

One can easily get the best way of investment after a little investigation self-learning about both or any of the investment method. Self-Learning is a must to be confident while investing your money anywhere. If you know about the mode through which you are going to invest then this will be the best to eliminate any risk factor. For getting more information you can go to the official websites of both and can get the information regarding both.

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