Saturday, December 22, 2018

How to Choose the Best Investment Scheme among PPF, FD, RD and Post Office Saving?



Investment schemes are potent ways of increasing your wealth with high investment returns for the future. There are various types of investment options available. Public Provident Fund, Fixed Deposit, Recurring Deposit and Post Office Savings scheme offer guaranteed returns at a relatively high rate of interest. These are the best saving options when it comes to low-risk but high yield investments.

Choosing any one investment scheme can become a difficult task, especially for first-time investors. All of the options mentioned above come with their unique perks. You should choose a scheme which will be advantageous as per your unique requirements. So, let’s take a look at how to select the best investment schemes among PPF, FD, RD, and Post Office Saving.

These funds are ideal to create a strong financial backup for future requirements. Individuals use these investment or saving schemes for a multitude of reasons, from funding their child’s future educational prospects to a world tour or even a new house post-retirement.


Considering Different Aspects of Each Investment Option


To choose an investment plan first, you have to consider the essential features of each scheme. Let’s take a look at some key features of these schemes for a better understanding.


1. Maturity Period


Maturity period is the time duration for which you invest. Your capital amount along with the total interest will be returned to you when the policy matures.

For a Public Provident Fund, the maturity period is of 15 years. Maturity period of FDs ranges from 7 days to 10 years. RD offers a minimum tenure period of 6 months to a maximum of 10 years. Various schemes in post offices offer different maturity periods. These generally range from 1 year to 15 years depending on the policy.


2. Interest Rates 


Interest rates are a key factor while choosing the best saving schemes. All of the plans mentioned above offer an attractive rate of interest.




The rate of interest of the PPF is reviewed every quarter. The current interest rate is 8.0% p.a. Fixed deposit interest rate varies between financial institutions. Currently, it ranges from 3.50% to 8.10% p.a.


3. Tax Deduction


Certain investment options offer tax exemptions under Section 80C of Income Tax Act. PPF and FD qualify for tax exemptions under this act. Certain post office schemes also offer tax exemptions. These include 5-Year Post Office Time Deposit, Sukanya Samriddhi Scheme, Senior Citizen Savings Scheme, National Savings Certificates, Post Office Savings Account, etc.

4. Security


Schemes like PPF, FD, various policies in the Post Office are considered secure investment options, putting them among the best saving options. All these policies guarantee returns because they are supported by the Government.

5. Premature Withdrawal


Premature withdrawal is possible in some policies like FD, RD, and a few schemes offered by the Post Office. PPF also offers withdrawals, but only after the 5th year of investment.

Premature withdrawals may be subjected to a fee in case of FD, RD, and Post Office schemes.


6. Investable Amount


Fixed deposit and recurring deposit schemes do not have a limitation on maximum investment amount. PPF has a maximum of Rs. 1.5 Lakh per annum, while various Post Office schemes offer different maximum investment limit.

Choosing the Right Savings Scheme


Considering the factors mentioned above, the best saving options for you will depend on your requirements and future financial plans. Their are numbers of long term as well as best short term investments that you can choose according to your financial need. For example, if you can invest a certain sum every month and want the flexibility to access your money, an RD will be suitable for you. FD is ideal for someone who can invest a certain sum for a fixed period.

PPF is a long term investment scheme, ideal for higher gains. You can also choose from various schemes offered by the Post Office. They have long-term and short-term savings options as well as policies for seniors, farmers, and girl child of the family.

Carefully consider the options and factors mentioned above, and you will find the suitable investment scheme for yourself.


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