We are often inclined towards saving from our regular income and then investing the savings into the options that can give the maximum returns. PPF (Public Provident Fund) is a very popular savings and investment tool mostly used for retirement planning. If an individual invests in PPF, he or she has access to benefits like higher annual interest rates and tax benefits under section 80C. The tax deductions can be availed on the income up to 1.5 lakhs that are saved in your PPF account. The additional feature here is, there are taxation benefits on interest of PPF account too.
The Provident Fund account matures after 15 years usually, but there is the scope of extending it further by 5 years. You will have to apply to the account provider if you want to extend it. You can withdraw the money at maturity inclusive of the interest and transfer it your savings account. The amount of money received at maturity of a PPF account is huge, and you need to be careful in spending it. However, if you do not have any immediate need for this amount you can invest it to further multiply the amount. There are many options in which the PPF maturity amount can be invested, and they are:
Fixed Deposits (FD)
Fixed Deposits or FDs are a very popular mode of investment in India. In this option, the principal amount that is invested by you stays safe, and the growth of the principle is also guaranteed over time. The financial service providers like Bajaj Finance provide attractive FD interest rates at Fixed Deposit accounts. The lock-in period in FD can range from 12 months to 60 months, and the interest rates vary from tenor and the profile of the individual. The maximum interest rate is 9.10% which is offered to the senior citizen customers on an annual basis. There are special interest rates for existing customers also that have already availed any of other services like loans or FD from Bajaj Finance.
Post Office Monthly Income Scheme
The post office network of India offers a plan for ensuring a monthly income for you after retirement. It is an opportunity for you to invest not only the principal amount but also the interest you gain as monthly income for that. In this plan, you have to deposit a fixed amount in the post office, and the interest over the amount is given to you as the monthly income. The interest in this plan is provided at a rate of 7.3%.
Mutual Funds (MFs)
Although they are a risk-prone investment but can give promising returns. It is important that you consider the risks involved before making an investment in mutual funds. It is not advisable to invest your entire maturity amount of Public Provident Funds in mutual funds because of the involved risks. You can make partial investments in these funds to grow your corpus. It is a suitable option for those who are willing to divide their maturity amount and invest in multiple options. Partial investment in mutual funds and remaining investment in fixed deposits can be a good choice for balancing the risk and stability factor of the investment.
The plans for investments are made for the betterment of your financial conditions, but it is also important that you invest the returns of the investment plans also wisely. This leads to the further growth of your savings and your retirement corpus. Investing in the right options will also help you in saving more efficiently for major investments like your child’s education or marriage. It is very important to be financially secure for these major events to be able to enjoy them without worrying about finances.