FD vs PPF: People who save money usually choose such options for investment, where they get returns, and their money is also safe. Anyway, there is a lot of turmoil in the stock market, due to which people are avoiding investing in stocks. In such a situation, PPF and FD are very popular investment options. Now the question is, which of these two is the best?
PPF or FD, where to invest money?
If you want to invest money in a place with guaranteed returns, then both PPF and FD are good for you. However, if you want to choose one, then for this you have to look at both of them on 4 parameters. This will help you decide whether to choose PPF or FD.
1- First, understand how much interest you will get
Most banks give interest between 6.7% to 7.1% annually on FD. At the same time, 7.1% interest is being given in PPF at present. That is, PPF and FD are the same in terms of interest. However, if you feel that your bank is giving less interest, then you can choose a PPF.
2- Tax benefits
Investing in PPF gives you tax exemption under section 80C of the Income Tax Act in the old system. Its interest is tax-free in both the new and old systems. There is no exemption on investing in FD, and the interest received on it is also taxable in most cases.
3- Look at the lock-in period, do not make a mistake
If you invest in PPF, you will not be able to withdraw money for 15 years. If you invest in an FD, then there is no such restriction on you. However, before making an FD, you have to decide on how many years it will be. It is for up to 5 years, and if you break it before the time, you have to pay a small charge. Often, people look at the returns, but make the mistake of not paying attention to the lock-in period.
4- Minimum and maximum investment
A minimum of ₹500 and a maximum of ₹1.5 lakh can be invested in PPF in a year. On the other hand, if you want to invest money in an FD, then you can invest as much money as you want.
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