Public Provident Fund (PPF) has attracted Indian investors for long time. Its guaranteed returns and tax-free fixed income are some of the reasons why many from the country want to invest their hard-earned money in it. However, once the scheme matures after 15 years, people look for options to invest where their money can grow fast. There are many ways in which one can invest their PPF money. Know about those options in this article.
PPF Account Maturity: Public Provident Fund (PPF) is a guaranteed return scheme where one gets a 7.1 per cent yearly compound interest rate. Not just a popular retirement fund scheme, it also gives one tax relaxation of up to Rs 1.50 lakh under Section 80C of the Income Tax Act. One can invest a minimum of Rs 500 to a maximum of Rs 1.50 lakh in PPF. The scheme comes with a maturity of 15 years, excluding the financial year of account opening.
It also has a loan and partial withdrawal facility for account holders.
These are some of the reasons why a lot of investors flock to invest their money in PPF.
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Rules for investing in PPF
The maximum amount of Rs 1.5 lakh annually can be deposited as a lump sum or in several installments.
However, one has to invest Rs 500 at least every year to maintain their PPF account, or else it will be discontinued by the bank or the post office.
The account, however, can be continued with a minimum Rs 500 deposit plus a Rs 50 default fee for each defaulted year.
While the maturity period for the PPF scheme is 15 years, one can continue the account after completion.
However, even if one doesn’t want to continue their account, there are many investment options where they can grow their money.
In this write-up, we will tell you about those options.
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PPF: How can your fund grow further?
1. Get your tenure extended
You can either extend your fund for another five years.
If you want to invest money in it, you have to tell your bank/post office within one year of maturity about it.
If you want to extend without making a deposit, you can also do so.
You will be receiving interest even in that condition.
Not only this, but the amount you withdraw from your PF account every year will also be tax-free.
2. Invest the funds elsewhere
If you invest Rs 1.50 lakh every year for 15 years and decide to withdraw your investment after that, your maturity amount will be Rs 40.68 lakh.
Since it will be tax-free, you can think of investing it in other ways.
Some of the investment options may be:
1. Real Estate
Real estate is an evergreen investment option, where appreciation can occur many times in a few years.
One can invest in real estate through investment avenues like a property, farm, or flat.
If you can’t afford a property in a metropolitan area, you can purchase in Tier-1 and Tier-2 cities.
If you think real estate investment can be risky and the project is delayed, you can indirectly invest in real estate through Real Estate Investment Trusts (REITs), where the investment size is small and can give you good appreciation.
2. Debt Funds
Debt mutual funds invest 65-75 per cent of their money in government and corporate bonds and securities.
They are less risky than large-, mid-, and small-cap mutual funds and can give you low but steady returns.
3. Balanced Advantage Funds
If you want to take high risks, you can choose dynamic mutual funds, in which your money is allocated between debt and equities according to the market valuation.
If you invest money for a long time, you can expect to get returns of up to 11–12 per cent.
