Should I choose PPF over debt funds?

My PPF account is going to mature in three years. Would it not be better to invest in PPF than debt mutual funds as they are more safe and rewarding?
- DP Singh

Yes, if you want to keep it as a part of your fixed income portfolio. Every investor should have some allocation to fixed income. My advice would be that an investor should look at their overall asset allocation and then invest one third of money in fixed income. As a fixed income option, PPF is a good vehicle as its return is tax-free and it definitely is safe. But if it is all that you have then it is not a wise thing. This will surely get you eight and a half percent but it won't be able to beat inflation by a wide margin. So investing in PPF is a good fixed income avenue only when considering the overall portfolio.

This article was originally published on December 26, 2018.