What Is PPF And What Are Its Benefits?

The Public Provident Fund was founded by the National Savings Institute, but it has since expanded to include several national and private institutions in an effort to become more flexible. Because it is regulated by the government and administered by the Post Office, it is a dependable and safe plan.

A decent interest rate is paid on the 31st of March every year, in addition to those assured returns. A PPF account has a 15-year maturity period with unlimited extension options. However, you can extend your PPF account in five-year increments by completing the 'PPF Account Extension Form.' You can repeat it as many times as you want. As a result, a PPF account holder who started their job early may be able to use their PPF account as a retirement-oriented investing vehicle by taking advantage of the limitless extension option.

This scheme is open to all Indians, with the exception of Non-Resident Indians and HUFs, and has a 15-year lock-in term.

Advantages of a PPF Account

Benefits of a PPF account are:

1. Secure and Stable Returns 

As previously stated, the fund was established by the National Savings Institute, indicating that it is a government-backed scheme, making it one of the safest investment options available. Its interest rate is calculated quarterly by the government using the securities rate set by the RBI, making it simple to calculate your returns and plan accordingly.

2. Stacking Benefit

Because a PPF account is a long-term investment, it benefits from compounding. The benefit of compounding on one's deposits is that the investor is entitled to interest on interest.

3. Minimum Investment

An individual seeking to invest can start with as little as 100 rupees, and the minimum amount that must be put down within a year is 500 rupees, making it a simple and great option for new investors, making it a popular plan.

4. Flexibility To Invest

The Public Provident Fund allows investors to make periodic payments or make a variety of payments throughout the year totaling up to 1.5 lakh per year, making it easier to invest appropriately and flexibly.

5. Policy Span 

The lock-in term for a PPF account specifies a minimum life span of 15 years, ensuring that you are disciplined in your savings so that you can attain the needed money for your investment goal.

6. Tax Benefits

The Public Provident Fund falls under the Exemption category, which means it qualifies for tax exemptions on investments, interest earned, and fund redemption. Furthermore, investments in PPF up to 1.5 lakh Rupees annually qualify for deductions under Section 80C of the Income Tax Act, so it's always a good idea to invest in PPF if you want to save money on taxes.

Conclusion

PPF is one of the safest and most stable funds to invest in, and as a result, it appeals to a wide range of people. It's a good option for someone looking to invest for the long term with a specific goal in mind, and it's just flexible enough in terms of payment options so that you don't have to worry about money in the present to plan for the future. Its loan facility guarantees assistance in times of need. It combines all of the elements that a fresh entry-level investor would want in his or her portfolio.

Also read - Term Insurance Plans And Associated Tax Benefits

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.