Investment in different avenues generally depends upon the objectives of the investors such as amount of investment, tenure, returns, taxability, risk bearing capacity etc. Though there are many choices of investment available in the market, Bank FD and PPF are ideal for those who have a lower risk appetite.
As a long-term saving instrument PPF, backed by the Government of India, provides not only guaranteed returns but also generates tax-free maturity, is the best suited for those investors who require the old-age income security. It is the ideal option to the people whom safety of capital is of utmost importance.
If a person who is risk averse but does not want a lock in of his funds and also wants better returns then FD is the best alternative in which the investor needs to make a lump sum investment for a fixed tenure and on this invested amount, banks offer you to get a fixed interest periodically till the end of the term or you may directly get whole interest along with the principal at the time of maturity. FDs of nationalized banks are considered as highly secured instruments.
Still there may be many questions in your mind as to where to invest between FD and PPF, we have tried to compare both these instruments in order to answer maximum questions in the table given below:
|Basis of Difference||Public Provident Fund (PPF)||Bank Fixed Deposit (FD)|
|Maximum Investment Amount||Rs 150,000 per year|
|No such limit|
|Interest Rates||Fixed- presently 8.1% p.a.|
|Variable- from 7 to 9% based on term|
|Interest earned is|
|Lock in Period||15 Years|
|7 days to 10 years|
|Income Tax Rebate u/s 80C||Yes, upto Rs 1,50,000/- p.a.|
|Yes upto Rs 1,50,000/- p.a., but on FD|
with a lock in period of 5 or more years
|Premature Withdrawals||Only partial amount, after the 5th year|
and subject to a limited extent only
|Entire amount, anytime but after|
charging a certain penalty
|Loans/Overdraft||Loan from third year onwards|
|overdraft facility upto 90% of the|
amount in the FD
|Tax Deduction at Source||Nil|
|Yes at the rate of 10% on interest|
earned if if it exceeds Rs. 10,000 in
one financial year
|Risky as compared to PPF|
2017 February 24 is a bank holiday in Chandigarh due to Mahashivratri.
2017 February 27 is a bank holiday in Sikkim due to Losar.
2017 March 03 is a bank holiday in Mizoram due to Chapchar Kut.
2017 March 12 is a bank holiday in Jammu And Kashmir due to Holi (Jammu Province Only).