06/02/2023
PPF is the most underrated and unexploited firm of investment in my opinion.
It has following advantages and should be amongst the first investment choices in any portfolio:
1) Start young, even minors can open
2) Small monthly commitment required - as low as Rs 500
3) 8% rate of interest
4) Return is risk free, capital and interest both guaranteed by the government
5) minimum lock-in 10 yrs - forces and instills discipline to invest
6) Best utilisation of power of compounding
7) Provides 80C benefits
Best product for long term fixed income investment.
Start young - open in your and kids names if not already done
Start small - 5000 per annum if not more
Minimum lock-in 15 years
Maximum 2 extensions of 5 years can be done.
Tip - Make investment before 5th of the month to maximize returns.
Earn highest return by investing entire 1,50,000 at start of financial year before 5th April.
Partial withdrawal - Although lock in of 15 yrs is there, partial withdrawal allowed after completion of 5 yrs.
Withdraw upto 50% of previous year balance.
One partial withdrawal allowed in an FY.
Falls under Exempt-Exempt-Exempt category, meaning -
All deposits are exempt under 80C
Accumulated interest is exempt from tax
Accumulated amount and interest is exempt at time of withdrawal
