Is Fixed Deposit better than PPF?

👉When it comes to FDs, they have a very flexible tenure. It starts from 7 days and goes up to 10 years.

👉Only tax-saving FDs have a lock-in period of 5 years.

👉For the rest, investors can choose the investment tenure as per their financial needs.

👉On the other hand, PPF has a lock-in period of 15 years.

👉However, partial withdrawals can be made after the completion of six years (i.e. from the seventh year) from the end of the year in which you made the initial investment.

👉Moreover, you can only withdraw an amount that is lower of the two – 50% of the balance at the end of the fourth financial year or 50% of the balance at the end of the preceding year.

👉Compared to FDs, they offer lesser investment flexibility.

➡️FD or PPF: What Should You Pick?

👉Both FD and PPF are good options for risk-averse investors.

👉PPF is preferred by people who are looking to save taxes along with investing for the future.

👉Due to the government backing, the security it provides is unmatched.

👉Also, the fact that the interest you earn is also tax-free adds to its attractiveness.

👉However, it comes with an extremely long lock-in with limited withdrawal options, that too from the 7th year.

👉FDs on the other hand are comparatively more liquid and give you the flexibility of deciding the tenure.

👉The tax-saving FDs have a lock-in of 5 years, which is much lesser than PPF.

👉But FDs go carry some risk and also the interest you earn is taxable.

👉So, if you are ok with a 15-year lock-in then PPF can be a good option keeping all things in mind.

Source: ET Money

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[GOWTHAMAN]

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