<div>Why are fixed deposits better investment avenues than PPF?</div>
  • SUBSCRIBE
  • WHAT TOPICS ARE YOU INTERESTED IN?

    Step 1 of 3

    NEXT Skip

    HOW OFTEN WOULD YOU LIKE UPDATES ?

    Step 2 of 3

    EMAIL ID

    Step 3 of 3

Get The Latest Updates

SUBSCRIBE

Why Are Fixed Deposits Better Investment Avenues than PPF?

  • Highlights

  • Get flexible tenor with fixed deposits

  • Get better interest rates with Fixed Deposits

  • Avail an easy loan against your FD

  • Withdraw your Fixed Deposits prematurely

When it comes to your savings, you are most likely to invest in at least a few secure financial instruments to protect your wealth. With safety high on your list of priorities, choosing between fixed deposits and a Public Provident Fund (PPF) can be a difficult choice.

To make the right choice, here are a few points to consider:

• Lock-in period

Lock-in period refers to the predetermined minimum time, you should stay invested. The lock-in period for PPF is 15 years, which may seem like an extremely long time, but this investment is meant to provide you with a nest egg, at the time of retirement.On the other hand, you can decide the lock-in period of a fixed deposit, which can range from 1 year to 5–7 years,depending on whether you’re seeking a short or a mid-term investment.Using this flexibility, you can plan your finances more efficiently.

Additional Read:FD or MIS: Who wins the investment battle?

• Interest rates

The Government fixes the interest rate for PPF investments. At present, the attractive interest rate is 7.6% with a lock-in period of 15 years. Bajaj Finance, an NBFC with high stability rating, offers the highest interest rates on Fixed Deposits. Senior citizens get a higher interest rate than usual, which helps them enjoy better returns.

• Loans against deposits

You do not have to break your fixed deposits prematurely, and you can get a loan against your deposits, in case of an urgent need for funds. You can get a loan against your fixed deposits, amounting to 75% of the total FD investments, which can be availed immediately. In case of a PPF investment, you can take a loan against your investment only from the third year onwards, until the sixth year.

How to take a loan against your FDs

• Taxation benefits

Fixed deposit income is tax deductible if it exceeds Rs.5,000 per year. When it comes to PPF, the investment, as well as interest income are tax-free under Section 80C, up to Rs.1.5 lakh per year.If you invest in a tax saving fixed deposit that has a lock-in period of 5 years, you will enjoy the same exemption a PPF account offers under Section 80C.

Additional Read: FD, FMP or Debt Fund: Which is the best investment option?

Bajaj Finance Fixed Deposit Calculator

• Premature withdrawals

Premature withdrawal facility is available in the case of PPFs,but, this facility can be used only after the seventh year. Besides, you can only withdraw a portion of the total amount. A fixed deposit investment can be prematurely withdrawn immediately, in exchange for a small fee.
It makes more sense for you to invest your income in a fixed deposit instead of a PPF account, as you can get higher returns and more flexibility. You can enjoy a better peace of mind along with financial freedom, by investing in a low-risk, high-return investment like fixed deposits.

Bajaj Finance is now offering high rate of interest up to 9.10%*

*For senior citizens, on a cumulative scheme tenor of 36-60 months

Fixed Deposit - Request a Call Back

Please enter your first and last name
Please enter 10-digit mobile number

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?

NEXT UP

PRODUCT GUIDANCE

What are the pros and cons of retiring early