Investment: Do you want both savings and growth? This is a better option between PPF and FD..

When it comes to the safety of money and good returns, investment options like PPF (Public Provident Fund) and FD (Fixed Deposit) are more preferred. Both these investments give stable and safe returns in the long term, as well as the benefit of tax savings. But the question is, which one is better for you? Let's understand…

PPF and FD: Both are safe

PPF is an investment that is specially made for the long term. In this, the money remains locked for at least 15 years, and the government keeps its interest completely safe. Therefore, if you want to grow your money for a long period and also want to save tax, then PPF is good for you.

On the other hand, in a fixed deposit, you invest a lump sum amount, which you can keep for several months to a few years as per your convenience. In FD, your money can also be withdrawn quickly.

Deposit amount and investment period

Every year, you can deposit at least Rs 500 in PPF, but the maximum annual deposit is limited to Rs 1.5 lakh. Also, its period is 15 years, which you can extend after 5 years. On the other hand, in FD, you can start investing even with a small amount, and there is no upper limit.

Difference in tax savings and interest

All the interest received in PPF is completely tax-free. Also, you can save tax on deposits up to Rs 1.5 lakh under Section 80C. There are some special tax-saving FDs for tax savings in FD as well. But generally, the interest received on FD is taxable, and TDS (Tax Deduction at Source) is also deducted on it.

Withdrawal and liquidity

When it comes to money, liquidity, i.e., easy withdrawal of money, is also important. In PPF, you do not have the freedom to withdraw money for 15 years. However, after the 7th year, you can make partial withdrawals or take a loan against your PPF account. In FD, you can withdraw money even before maturity.

Interest rate and returns

The interest rate on PPF is decided by the government, which is usually slightly higher than that of FD, and it is updated every three months. Interest is compounded annually, which makes your money grow in the long run. The interest rate on an FD depends on the bank and it varies according to the period.

Which option to choose?

If your priority is safe investment and tax savings for the long term, then PPF will be better for you. It will help your money grow. On the other hand, if you want to invest for a short period in which money can be withdrawn quickly and you get a fixed return, then FD is the right option.

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