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I am a senior citizen and have been investing in PPF for the past 15 years, which will mature in April next year. My question is should I extend it for a period of another five years or invest the accumulated amount in equity mutual funds? I don't require this for my regular income as I work part-time.
- Suresh
I would say first take a look at your overall investment spread. If you do not have any equity investment, then you must invest in equity mutual funds once your PPF matures.
Usually, my suggestion is that one should continue with one's PPF for 15 years as it essentially is a form of fixed-income SIP. However, doing SIP in equity funds with the same duration gives better returns than those given by PPF. Having said that, I like PPF as a fixed-income investment since the interest on the accumulated amount is tax-free for you. So, you can well extend it for five years. However, as mentioned previously, if you don't have any equity exposure in your portfolio, then you must invest some portion in equity funds. For the same, consider investing in an aggressive hybrid fund. This is because even when you stop working, it is good to have some exposure to an asset class which provides inflation-beating returns.
This article was originally published on November 26, 2019.
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