PPF Tips: People often ignore these things while investing in PPF, know here...

You can indeed accumulate a lot of money in the long term through PPF, but if we look at the other side of the coin, then the lock-in period of 15 years is also the biggest drawback. In this scheme, your money gets locked for the entire 15 years. You cannot close it before maturity (except in some special circumstances). In today's fast-changing times, 15 years is a very long time. During this time, your financial goals can change, you may need money for an emergency, and in such a situation, this clause is a big obstacle.

Low liquidity: Difficult to withdraw money when needed
PPF has the facility of loans and partial withdrawals, but its rules are so strict that they do not make it very liquid. You can take a loan only from the third year of opening the account to the end of the sixth year. The loan amount can also be a maximum of 25% of the amount deposited in your account. On the other hand, if we talk about partial withdrawal, then you can withdraw some money from the 7th year of opening the account. But this also has a limit. You can withdraw only 50% of the balance at the end of the fourth financial year immediately preceding the withdrawal year or 50% of the balance at the end of the previous financial year, whichever is less.

Interest rate is not fixed; it can also decrease!
If you invest money in an FD or any scheme for 5 years or 10 years, then even if the interest rate changes in between, it does not affect your investment. But this is not the case with PPF. The government reviews its interest rate every quarter (three months). Although this interest rate is still better than many bank FDs, there is no guarantee that it will always remain the same. In the last few years, PPF interest rates have come down from 12% to 7.1%. If interest rates decrease further in the future, your estimated return may be very low.

Weak in beating inflation
PPF is a safe investment, but it is not necessary that it is the best way to create wealth. Inflation reduces your returns to a great extent in the long term. Suppose PPF is giving a return of 7% and the inflation rate is 6%, then your real return is only 1%. On the other hand, Equity Linked Savings Scheme (ELSS) or good mutual funds are able to easily beat inflation by giving much better returns in the long term.

Investment limit: Only ₹ 1.5 lakh per annum

You can deposit a maximum of ₹ 1.5 lakh in a PPF account in a financial year. For those who earn more and want to invest more, this limit is very low. If you want to create a big fund for your retirement or any big goal, then relying only on PPF will not be enough. You will also have to include other investment options such as mutual funds, VPF, etc. in your portfolio.

No option of a joint account
Unlike other schemes, you do not get the option of joint account in PPF. But you can make a nominee in it. Apart from this, a person can open only one PPF account.

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