Why Public Provident Fund (PPF) has been the most sought after investment for retail investors ?

Public Provident Fund

Public Provident Fund (PPF) is the most sought after investment for retail investors as it is by far the most secure investment available in the market. The risk involved is almost none and the benefits are quite attractive.

It is a type of investment which is similar to a Bank Deposit, in this case on needs to invest money into a PPF account which is available with certain public and private sector banks.

List of Private Sector banks accepting PPF deposits are

1. ICICI Bank
2. HDFC Bank
3. Axis Bank

List of Private Sector banks accepting PPF deposits are

1. State Bank of India
2. SBI Associates
3. Bank of Baroda
4. Central Bank of India
5. Union Bank of India
6. Oriental Bank of Commerce
7. Bank of Maharashtra
8. Canara Bank
9. Bank of India
10. Dena Bank
11. IDBI
12. Corporation Bank 

 Key Information about PPF

• Current Interest Rate : 8.1% (April - June 2016)
• Duration of Investment : 15 years and extendable for 5 more years. Minimum lock-in period is 7 years. One can completely withdraw money from PPF after 5 years for higher education or medical treatment.
• Amount of Investment : Rs. 500 to Rs 1,50,000
• Tax Benefits : A. Tax Deduction up to Rs. 1,50,000 under Sec 80C & B. No Tax on Interest.
• Deposit Style : One needs to deposit a certain amount every year in order to keep the account active.

Why one should invest in PPF ?

PPF is an secure investment and it gives better returns from those who invest in Fixed Deposits there is an opportunity to get tax exemption for both your principal as well as interest. But there are trade-offs too in terms of duration as well as lock-in period. So I would recommend that even though there is trade-offs one should invest around 15-20% (maximum Rs 1,50,000) of its savings every year before 5th of April so that you earn interest on the entire year for that investment. Also, I would even recommend that you open your PPF account where you have your Bank A/C for smooth transfer of funds. There are Banks which provide online PPF account, I would recommend the most as it gives a lot of convenience to the end users.