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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:

DID You Know? Bajaj Finance Fixed Deposit offers assured returns of up to 8.35%*, along with multi-deposit, loan against FD, and auto-renewal facilities. Invest Online

• 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 attractive rate of interest up to 8.05%

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

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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