Provident Fund –Vs- Fixed Deposit, which investment strategy is right for you? If you want a relaxed
lifestyle without the hassle of earning money in retirement, public provident funds and fixed deposits
maybe the right option for you.
Financial planning for the future
is very important. Especially when we start earning money at a young age. If
you don't earn from a young age, the responsibilities and expenses will
increase with age. Naturally, one would have to work harder and not be able to
retire early. The good news is that there are multiple ways to save for people
of all ages.
If you want a relaxed lifestyle
without the hassle of earning money in retirement, public provident funds and
fixed deposits may be the right options for you. Investing in these two ways
can easily save money for the future. Both plans have advantages and
disadvantages. That is why one must know all the details before investing in
any system. The report analyzes in detail the investments of PPF and FD.
What is PPF?
The Public Provident Fund is a
long-term permanent savings plan of the government. Investments under this
scheme offer tax-exempt benefits as well as guaranteed returns. The investor
can claim tax exemption under Section 80C of the Income Tax Act of India. The tenure
of the PPF account is 15 years and no withdrawal can be made before expiration
unless there are special conditions. If the account lasts 5 years, the investor
can withdraw part of the money.
PPF is a long-term savings scheme
recognized by the government.
Investors can invest up to Rs
1,50,000/- per annum and take advantage of tax exemption under Section 80C of
the Income Tax Act.
The PPF period is 15 years and
partial retirement is possible under various conditions.
Investments, dividends, and
post-refund gains are tax-free.
Post offices, banks and financial
institutions provide PPF services.
What is a fixed deposit?
A fixed Deposit or FD is the safest
option. In this case, the interest rates are much higher than in risk-free
savings accounts. When investing in time deposits, the investor has to adjust
the tenure and the interest is paid accordingly. For the elderly, savings pay
comparatively high-interest rates.
About fixed deposits
The fixed deposit is a safe
investment option that offers guaranteed interest rates.
In this case, the investor has zero
probability of loss.
Fixed income returns are superior
to other risk-free investment options.
A tax was collected on interest
over Rs 40,000. However, the investor can claim tax exemption.
Complementary loans are granted based on fixed amounts.
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