As a parent, you want the best for your children. One of the ways to ensure their financial stability and security is by making smart investments. One such investment option is the Public Provident Fund (PPF) Scheme. In this blog post, we are going to discuss the top 10 reasons why the PPF Scheme is the best investment option for your children.
What is the PPF Scheme?
Before we delve into the benefits of the PPF Scheme, let’s first understand what it is. The PPF Scheme is a long-term investment option offered by the government of India. It was introduced in 1968 with the aim of providing a safe and secure investment option for the general public. The PPF Scheme has a maturity period of 15 years and offers attractive interest rates that are decided by the government on a yearly basis. As of January 2023, the interest rate for the PPF Scheme is 7.1% per annum, which is higher than most other savings instruments.
1. Long-term savings for Child
One of the biggest advantages of the PPF Scheme is that it is a long-term investment option. This makes it a perfect choice for children as it helps them save and plan for their future goals. Whether your children want to pursue higher education, start their own business, or simply have a financial cushion for the future, the PPF Scheme can be a great way to help them achieve their goals.
2. Attractive interest rates
As mentioned earlier, the PPF Scheme offers attractive interest rates that are higher than most other savings instruments. As of Jan – Mar 2023, the PPF Account gives an interest rate of 7.1% per year.
This means that your children’s investments will grow at a faster rate, resulting in higher returns in the long run. The interest rate for the PPF Scheme is decided by the government on a yearly basis and is compounded annually.
This means that the interest earned is added to the principal amount, and the interest is calculated on the increased amount for the next year.
3. Tax-efficient investment scheme
The PPF Scheme is a tax-efficient investment option. Contributions made to the PPF account are eligible for tax deductions under Section 80C of the Income Tax Act. This means that you can reduce your taxable income by investing in the PPF Scheme.
Additionally, the interest earned and the maturity amount received are tax-free. This makes the PPF Scheme a great investment option for those looking to save on their taxes while also saving for their children’s future.
4. Partial withdrawal and loan facilities
The PPF Scheme offers the option of partial withdrawals and loan facilities. This is useful for children who may need funds for their education or other emergencies. You can make partial withdrawals from the PPF account after the completion of 7 years.
The loan facility is also available from the 3rd financial year of opening the account until the completion of the 6th financial year. This feature makes the PPF Scheme a flexible and convenient investment option for your children.
5. High level of safety and stability
The PPF Scheme has a high level of safety and stability. It is backed by the government, which makes it a secure and reliable investment option for children. The PPF Scheme is also a low-risk investment option as it is not linked to the stock market or any other external factors. This makes it a suitable choice for those who are risk-averse or are looking for a stable and secure investment option for their children.
6. Long-standing history of PPF
The PPF Scheme has a long-standing history and has been in existence since 1968. This demonstrates its popularity and effectiveness as an investment option. The fact that it has been around for over 50 years and is still going strong is a testament to its reliability and success.
7. Easy to open and maintain PPF Account
The PPF Scheme is easy to open and maintain. It can be opened at any branch of a nationalized bank or at a designated post office. The process to open a PPF account is simple and straightforward. All you need is valid identification proof, address proof, and two passport-size photographs.
8. Flexible contribution amount
The PPF Scheme has a flexible contribution amount. You can contribute any amount between Rs. 500 and Rs. 1.5 lakhs per financial year. This makes it an affordable and convenient investment option for everyone.
You can choose to contribute a fixed amount every month or make lump sum contributions as per your convenience. You can also open a joint account with your spouse or nominate someone to the account.
9. Extension of PPF Account
Yes, the Public Provident Fund (PPF) account can be extended after the completion of the 15-year maturity period. The extension can be done in blocks of 5 years at a time. .\
To extend the PPF account, you need to submit Form H to the bank or post office where the account is held. The extension can be done online through the e-NPS platform as well.
During the extension period, you can continue to contribute to the PPF account and earn interest on your contributions.
The extension of the PPF account is a convenient option for those who want to continue to save for their long-term goals or for those who have not reached their desired savings target. I
t is also a good option for those who want to continue to benefit from the tax benefits and the high level of safety and stability offered by the PPF Scheme.
10. Nomination facility
The PPF Scheme also has a nomination facility, which allows you to nominate someone to receive the maturity amount in case of your untimely demise. This is a great way to ensure that your children’s investments are protected and secure. You can change the nomination at any time during the term of the PPF account.
In conclusion, the PPF Scheme is a great investment option for children because it offers long-term savings, attractive interest rates, tax benefits, partial withdrawal and loan facilities, a high level of safety, a long-standing history, easy opening and maintenance, a flexible contribution amount, a high rate of liquidity, and a nomination facility. So, if you want to secure your children’s future and help them achieve their financial goals, consider investing in the PPF Scheme.
Investing in the PPF Scheme is a simple and effective way to ensure your children’s financial stability and security. The long-term nature of the PPF Scheme, coupled with the attractive interest rates and tax benefits, make it a worthwhile investment option for your children’s future. So, don’t wait any longer and start investing in the PPF Scheme today!