Bajaj Finance Best Investment Plans

Should you invest in a Public Provident Fund or Fixed Deposits?

Should you invest in a Public Provident Fund or Fixed Deposits?

As convenient and safe form of savings, we look to invest either in Public Provident Fund (PPF) or Fixed Deposit (FD). Although both are investment instruments, the differences between PPF and FD are substantial, and each comes with its own set of features that make them unique for customers.

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Features and Benefits of PPF and Fixed Deposits

Here’s a brief comparison of different aspects of PPF and FDs:

  1. Tenure
    With PPF, the amount you invest will be locked in for 15 years. PPF doesn’t offer any other tenure to customers, so their amount remains locked in for 15 years.
    Bajaj Finance offers you FD tenures ranging from 12 to 60 months. Thus, you get the flexibility to choose the investment period for FDs, which you cannot with a PPF.
  2. Premature withdrawal
    When you invest in a PPF, you get to withdraw the amount only after completion of the fifth year and that too, up to a limited amount.
    Bajaj Finance enables you to withdraw an FD prematurely after a minimum lock-in period of 3 months. You can also avail a loan against your Fixed Deposits.
  3. Loan facility
    You can avail loans against your PPF only after the completion of the 3rd year. However, you can get a loan against FD at any point of time.
    Get loans up to 75% on cumulative FDs and up to 60% on non-cumulative FDs, when you invest in Bajaj Finance Fixed Deposits.
  4. Deposit amount
    The maximum amount deposited with a PPF is limited to Rs. 1.5 Lakh per year. With FDs, there is no fixed limit.
    In this case, if you ask – PPF or FD which is better, the answer will be FD.
  5. Rate of interest
    The rate of interest for PPF is set by the Government while that of FD is set by the individual bank or NBFC.

To help you compare the differences between the two, here’s a table to help you understand the differences between investing in a PPF or a Bajaj Finance FD:

Feature Public Provident Fund (PPF) Bajaj Finance Fixed Deposit
Tenure Investment is locked in for at least 15 years Flexible tenures from 1 to 5 years, with re-investment option
Premature withdrawal Withdrawal is possible only after 5th year Withdrawal is possible after minimum lock-in period of 3 months
Tax benefits Tax benefits under Section 80C Bajaj Finance doesn’t
Loan facility Loan can be availed only after completion of third year Easy loan against FD facility available at anytime
Deposit amount Maximum amount deposited is limited to Rs. 1.5 Lakh per year No upper limit on deposit amount
Rate of interest 7.1% for Q2 FY 20-21 Range from 6.69% to 7.35%, basis tenure and interest payout frequency

As FD comes with more flexibility, it is the winner in this PPF vs FD battle. Invest with a minimum of Rs. 25,000 in Fixed Deposit with Bajaj Finance and get FD interest rates up to 7.10%, with 0.10% additional rate benefit on investing online and 0.25% additional interest rate for senior citizens.