What makes PPF a must-have in your investment portfolio?

1. Tax benefits – PPF offers tax benefit at all the three stages of investment – the initial investment (eligible for tax deduction under Section 80 C up to Rs 1.5 lakh), at the time of interest accrual and at the time of withdrawal. This EEE status (exempt, exempt, exempt) makes PPF a unique savings instrument.

2. Secure returns – Being a government-backed savings scheme, PPF enjoys sovereign status, which makes it an extremely safe instrument.

3. Stable returns – The interest rate on PPF is linked to the Government-securities rate and is fixed by the government usually every quarter. Hence, it is possible to calculate the returns you can earn on your investment.

4. Long-term savings – With a 15-year lock-in period, PPF enables long-term savings. Hence, you can map it to your long-term goals such as your retirement corpus, or your children’s higher education, etc. After the 15-year lock-in period, you can extend the PPF account in blocks of 5-years, indefinitely.

5. Flexibility to invest - You can invest in instalments of any amount up to a limit of Rs 1.5 lakh in a year. You can either invest in regular instalments by linking it to your Savings Bank account or you can invest varying amounts during the year. You can invest monthly, half-yearly, quarterly, or annual instalments. This makes it easier for you to plan your finances. 

[Also Read: Financial planning tips to save for your future]

6. Invest in minor’s name - A PPF account can be opened in a minor’s name by the parent/guardian. The tax benefits will apply to the parent/guardian. Since the lock-in period is for 15-years, it is a suitable investment for your child’s future needs such as higher education or marriage. When your child turns 18 years, he/she can operate the account.

7. Flexibility to withdraw - Despite a long lock-in period, you have the option to withdraw part of your savings after the completion of five years. This makes it a flexible investment to meet any financial requirement. 

8. Easy to operate – It is possible to invest and operate your PFF account online, with Aadhaar verification and by linking it to your Savings Bank account. This makes it instant and easy to operate, without the hassle of documentation.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision