It guarantees returns, it offers tax concessions, it inculcates the habit of saving regularly - attributes that make the Public Provident Fund (PPF) a great investment vehicle.
PPF is long-term savings instrument backed by the central government with the objective of providing old-age income security to the self-employed and those working in the unorganized sector. Here are 10 reasons why you should be opening a PPF account today, if you haven't already:
* It offers tax deductions, guaranteed returns & withdrawals after the lock in period* A systematic savings plan, it works on the dual benefit of the power of compounding and regular investments
* For conservative investors, and those in the unorganized sector, it is the easiest way to save regularly
* Complete capital protection since the scheme is backed by the Government of India
* The interest rate is notified before April 1 every year, and is aligned with G-Sec rates of similar maturity
* No age limitation to open an account, you only need to be an Indian resident
* Despite the 15-year lock-in, liquidity is offered in the form of loans and withdrawals, subject to conditions
* The sum invested in PPF is eligible for tax deductions under Section 80C, up to Rs 1 lakh every financial year
* On maturity, the entire amount, inclusive of the interest, is tax-free. Furthermore, the deposit is also exempt from wealth tax
* Opening a PPF account is as simple as walking into a post office or most major, nationalized banks
This article was originally published on February 14, 2014.
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