comparison between FD and PPF.
introduction:
In the quest for financial security, selecting the right investment vehicle is pivotal. Fixed Deposits (FD) and Public Provident Fund (PPF) are two popular choices, each offering unique benefits. This blog dissects the returns of FDs and PPF, shedding light on the distinctive features that can shape your investment strategy.
1) What is FD (Fix Deposit)
A fixed deposit (FD) is a type of financial instrument in which you make a one-time, lump sum payment at a fixed interest rate to a bank or other financial institution for a predetermined length of time. At the conclusion of the predetermined term, you will receive the principal amount plus interest. The money is locked in throughout that time. It’s a low-risk avenue for investing.
How to open FD (Fix Deposit)
Many of bank and financial institutions provide the FD service like HDFC Bank,Axis Bank,SBI Bank.Now a days u can also book ur FD online with online banking.
Time of period for FD
Fixed Deposits have a flexible duration. It can be 7 days or 10 years. The length of time the money are locked in determines the fixed deposit’s interest rate. The amount of a Fixed Deposit is not withdrawable until the maturity term, just like a Recurring Deposit.
Returns of the FD ( Fix Deposit)
The best FD interest rates are provided by NBFCs and small finance banks. PSU banks and sizable private sector banks come next. The fixed deposit rates offered by other private sector banks are not as high as those offered by Bandhan Bank, DCB Bank, Tamilnad Mercantile Bank, RBL Bank, IDFC First Bank, IndusInd Bank, Yes Bank, SBM Bank, CSB Bank, and Federal Bank. For regular depositors with terms ranging from 7 days to 10 years, scheduled banks provide FD interest rates between 2.50% and 9.00% per year. An extra interest rate of 0.50%–0.75% p.a. is typically offered to senior folks on top of the current FD card rates.
2) WHAT IS PPF(Public providant fund)
To put it simply, PPF is a long-term investment plan that is well-liked by people looking to generate significant but steady returns. The main goal of someone registering a PPF account is to ensure that the primary is properly saved.
When a PPF scheme is opened, the applicant is assigned a PPF account where interest is compounded and funds are deposited on a monthly basis.
Importance of a PPF Account
For people who don’t want to take on too much risk, a public provident fund plan is the best option. This strategy is supported by guaranteed returns because it is required by the government to safeguard the financial needs of the majority of Indians. Moreover, invested money in the PPF account is also not tied to the market.
A further option for investors looking to diversify their financial and investing portfolios is the public provident fund regime. PPF accounts can offer consistent yearly returns on investment during economic downturns.
Features of a PPF Account
The key characteristics of a public provident fund scheme can be listed as follows–
- tax benefit Up to Rs.1.5 lakh under Section 80C
- Offers guaranteed, risk-free returns
- Minimum Investment Amount rs 500.
- Maximum Investment Amount Rs 1.5 lakh per annum.
- Tenure: 15 years
- Rate of interest 7.1 % per annum
Investment Duration
There is a 15-year lock-in period on investments in PPF accounts, after which money cannot be fully withdrawn. After the PPF lock-in term ends, an investor may elect to prolong this tenure by an additional five years, if necessary.
How to Open a PPF Account?
Both offline and online procedures are available for an individual provided he/she meets requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.
The following documents have to be produced at the time of activation of a public provident fund account –
KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc
PAN card
Residential address proof
Form for nominee declaration
Passport sized photograph .
