PPF: If you don't consider these 5 things before investing, you'll regret it..

The Public Provident Fund (PPF) is considered one of the safest and most tax-friendly investment schemes in the country. Millions of people invest in it due to its guaranteed returns and tax benefits over the long term. However, people often open a PPF account simply based on the perceived advantages without fully understanding the rules. Later, when they need money or expect better returns, they regret it. If you are also considering investing in PPF, you should definitely consider these 5 important points first.

1. No Joint Account Option in PPF

While many other savings schemes offer the option of opening a joint account, PPF does not. A PPF account can only be opened in a single name. However, you can nominate more than one person and specify their respective shares. If the account holder dies for any reason, the nominee has the right to withdraw the entire amount.

2. Not Allowed to Open More Than One PPF Account

A person can only open one PPF account. If, by mistake, two PPF accounts are opened in your name, the second account will not be considered valid. Interest will not be accrued on the second account until both accounts are merged. In such a case, the investor may suffer a loss.

3. Interest Rate Has Not Changed for a Long Time
The PPF interest rate is determined by the government from time to time. From April 2019 to June 2019, the interest rate was 8%. After that, it was reduced to 7.9%. In January-March 2020, the interest rate was reduced to 7.1%. Since then, the PPF interest rate has remained at 7.1%. If it decreases further in the future, there may be other options in the market that offer higher returns.

4. Maximum Investment Limit is Fixed
You can invest a maximum of ₹1.5 lakh in PPF in a year. If your salary is high and you want to invest a larger amount, it is not possible. Such investors have to look towards mutual funds, NPS, or other schemes for tax savings and better returns.

5. Closing the account before 15 years is very difficult
The maturity period of PPF is 15 years. If you need money in between, you are not allowed to withdraw the entire amount.

Partial withdrawal: Possible from the sixth financial year.

Premature closure: The account can be closed before 15 years only in certain specific situations, such as:

Medical emergency
Higher education
Shifting abroad
If money is withdrawn before maturity, the amount is given after deducting 1% from the interest rate.

Who is PPF suitable for?
PPF is best for those who want to lock in their money for the long term and earn safe and tax-free returns. However, for those who need flexibility or expect higher returns, this scheme may prove to be limiting.

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