Which is investment option better Public Provident Fund or Fixed Deposit?

 

We usually spend our lives working hard to afford a good lifestyle and to achieve high income and a good post. It takes a lot of efforts in order to get successful and to earn a good revenue. It’s often seen that people always save money for future and to make their dreams come true like dream wedding, house, and car or for your old age after the retirement. We all make sure that our future is safe and secured.

Now in case if you are earning some extra income, you can always go for investing it rather than saving. Investing your funds can always give you better returns over it. But investing at times can be risky. There is often seen a hesitation among people when it comes to investment. People often think twice before investing as they are considered risky.

Investing replicates your funds which are why investments should be a preferred option. Now when it comes to investments its important one invests in a safe place which involves low risk. As investments involve risk it can be a possibility that one might face huge loss when investing in a higher risk investment. There are some investments that involve low risk they still offer you higher returns which are high compared to savings.

If you wish to invest in a low-risk investment then you have two options with you: Public Provident Fund (PPF) investment or fixed deposits (FD). Both these investments are safe and give you higher returns. Let’s study these options as to understand which of these options can suit you.

  • Public Provident Fund:

When it comes to public provident fund, as the name suggests, they are provided by public sector companies. This is an investment option provided by the government. It’s safe to assume that the investment option provided by the government are secured.

Public Provident Fund is a safe and secure long-term investment product in India. You are not required to pay any taxation on this investment option. You can open a PPF account with a bank or a post-office and the money that you invest is locked in for a term of 15-years. During this time, you keep earning compound from this account. You also have the option to extend the term by 5 years. The only catch about having a PPF account is that you cannot withdraw any money for the first 6 years. In case you are stuck in a financial emergency, you can take a loan against your PPF account. Because PFF investment is not a one-time investment you don’t have to invest all your funds at a time. Instead, you can invest as and when you want to.

  • Fixed deposit:

Fixed deposit investment is preferred by most as this investment is a safer option and provides higher interest rates than other investment option. Investment in the fixed deposit is considered as a one-time investment where in you have to invest all you funds at the same time with good rate of interest on your FD. Now the interest rates offered to you on your FD amount differ from banks to banks. Some banks may provide you with high-interest rate whereas some may provide you with low interest. Also the returns you get depend upon the tenure you’re investing for and the amount that you are investing.

In the case of a financial emergency as PPF, fixed deposit also restricts you from withdrawing funds. But fixed deposits provides you with an overdraft facility. Under an overdraft facility, you can withdraw up to 90% of the amount from your FD account. But while repaying this amount you also have to pay interest on the amount you withdrew on the last day of your overdraft.

Having this facility makes a fixed deposit worth an investment. In case if you have a financial emergency you can withdraw funds easily from a fixed deposit compared to PFF. Thus investing in a FD would be a better option.