Safety….Safety….Safety….This is all you want, for your investment. You just don’t want to lose your hard earned money. In these hard times, a great saying comes to mind.
“If you do not know how to care for money, money will stay away from you.”
- Robert Kiyosaki
Now an excellent investment comes your way. It’s called the public provident fund, popularly known as PPF. You can invest your hard earned money in the PPF. This is an excellent investment for the long term.
The good news:
But you want your investment to be safe? You cannot lose money….Right. There’s more good news. PPF is a very safe investment. It is backed by the Government of India. What more can you want? You also get good interest, which is higher than inflation and certainly more than a fixed deposit. Want to use PPF as an investment for retirement? IndianMoney.com has built its proprietary financial education platform called “Wealth Doctor” though which it offers financial education to people. Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website.
Public Provident Fund also called PPF, is a very popular long term investment in India. It is backed by the Government of India.
The interest rate on the PPF, has been fixed at 8% for the quarter, October to December 2016. This is the lowest interest rate, in the past 40 years. Yet, PPF remains an excellent tool to invest. PPF gives a return, which is about 3% above RBI’s inflation target for March 2017, which is set at 5%. A return above inflation makes it an excellent long term investment for conservative investors, who are investing for retirement.
PPF enjoys EEE benefits. What does this mean? You get a tax deduction under Section 80 C of the income tax act, up to INR 1.5 Lakhs a year, on your investment in the PPF. The amount which accumulates (grows with time) and is withdrawn at maturity, is tax free. This is the EEE benefit.
Compare this with the fixed deposit. The interest rates offered by most banks on FD’s, are 7-7.5% a year. This is lesser than the 8% a quarter, offered by the PPF. When it comes to tax benefits, PPF is on par with ELSS and EPF. Fixed Deposit tax benefits, are nowhere close.
You need money in a hurry. You are left with no option, but to avail a loan. You rush to grab, what is famously called the emergency loan, better known as the personal loan. Personal loan is an unsecured loan (loan without collateral), which charges you interest around 16-22% a year. This is a very high rate of interest. Why not avail a loan against PPF? You can avail a loan against money in your PPF account, from the 3rd year to the 6th year. You are charged, an interest of around 2% more than the interest rate, you earn on the PPF. This is a secured loan (loan against PPF). You can call this your cheap personal loan.
Yes…PPF is a financial instrument, which gives you more than you can wish for. Safety of your investment….Tax benefits…loans against it….returns which beat inflation, the list is endless. So just invest in this great financial instrument, and watch your money grow, as you save for retirement.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.