Drawbacks of Investing in PPF

Even if, investment in PPF offers a lot of benefits to its investors, it has some drawbacks too, which are listed below in detail:

  1. Problem of Liquidity: It does not provide much liquidity as compared to other investible avenues
  2. Higher Lock-in Period: It has a long lock-in period of 15 Years
  3. No Periodic Income: Unlike Bank FD or Post Office MIS, no periodic income is available under PPF
  4. Unstable Interest Rate: Interest rate on PPF varies according to the market fluctuations each year
  5. Limited Categories of Investors: HUFs, NRIs, Trusts, Foreigners, etc. cannot invest in PPF
  6. No Closure before Maturity: PPF account cannot be closed prematurely (except in case of death)
  7. Single Mode of Holding: It cannot be opened jointly
  8. Returns are not too competitive: The interest offered is not so competitive as compared to other investment instruments.
  9. Cap on Investment Amount: An account holder can invest Rs 1.50 lakhs in one financial year in his/ her PPF Account
  10. Online Investment facility is not offered in PPF by Post Office: Post offices, where most of the people maintain their PPF Accounts, so not offer online investment facility