PPF or FD

Fixed deposits (FD) and Public Provident Fund (PPF) are two investment platforms that deliver substantial and assured returns. Individuals looking to generate revenue from their savings need to know comprehensively about both these plans in detail to pick the right one.

The following fixed deposit vs PPF comparison will help you choose the right investment option.

Minimum and Maximum Limit    

  • FD – Minimum amount required to open an FD account is Rs. 25,000 while the maximum limit is Rs. 5 Crore. You only have to invest a lump sum amount once.
  • PPF – Minimum amount required to open a PPF account is Rs. 500. You have to contribute this amount every year to maintain the account and avoid penalties. The maximum amount you can invest in a year is Rs. 1.5 Lakh.

You can make a maximum of 12 cash inputs in a year without any monthly restrictions on each. However, the maximum annual limit will apply in total.

A FD is the ideal option to opt for if you don’t want to make periodic investments or if you want to invest a larger sum.

Rate of Interest

  • FD – Rate of interest on Bajaj Finance Fixed Deposits can go up to 8.75%. A 0.35% additional interest is applicable for senior citizens.
  • PPF – Rate of interest on PPF is currently 8% w.e.f 1st April 2019. The Government reserves the right to revise the rates every financial quarter.

Fixed deposits are a winner in this FD vs PPF pointer as they offer much higher returns.   

Tenor

  • FD – Fixed deposits come with tenors ranging from 12 to 60 months.
  • PPF – PPFs have a fixed lock-in period of 15 years. You can extend the account in a block of 5 years after maturity.

FDs offer more flexible investment time periods or tenors. Moreover, you can opt for a non-cumulative FD for monthly, quarterly, half-yearly or annual interest payouts.

Liquidity

  • FD – FDs enable you to prematurely withdraw your investment anytime against nominal penal charges.
  • PPF – PPFs offer premature withdrawal only after the completion of 5 investment years and that too, for specific reasons like serious illness and higher education.

Fixed deposits are the victor in this fixed deposit vs PPF pointer as they evidently offer higher liquidity.

Tax Benefits

  • FD – Interest earned on fixed deposits is taxable. The TDS rate is 10% or 20% if you have not furnished your PAN.

You can opt for a 5-year tax-saver fixed deposit which is exempt from income tax.

  • PPF – Interest earned on PPF is exempt from income tax under Section 80C of the Income Tax Act. The exemption is a total of Rs. 1.5 Lakh per annum for every individual’s ‘income from other sources.’

Tax-saver FDs can save more than PPF. Other FDs can also do the same as per Section 80C.

Loan Against Deposit

  • FD – Bajaj Finserv offers Loans Against Fixed Deposit of up to 75% in case of cumulative and 60% in case of non-cumulative FDs.
  • PPF – You can avail a loan against your PPF from the 3rd financial year till the 6th financial year.

Fixed deposits can help you out in times of emergencies by providing a loan whenever you need it.

To sum this fixed deposit vs PPF comparison, FDs are easily a better investment option. Make sure to use an FD interest calculator to plan your investments successfully.

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