PPF Vs FD

Benefits and Features of FD

The main benefits and features of the FD scheme are mentioned below:

1. Tax benefits can be availed.
2. An additional interest rate may be offered to senior citizens.
3. Income can be earned on a regular basis.
4. Returns are guaranteed.
5. Flexible tenure options are provided.

Public Provident Fund

The PPF scheme is backed by the Indian government and was launched in 1968. Apart from post offices, certain private and nationalised banks offer the PPF scheme. The PPF scheme comes with a tenure of 15 years and the interest rate is set by the government.

Tax benefits can be claimed for any investments made towards the scheme.

Benefits and Features of PPF

The main benefits and features of the PPF scheme are given below:

1. Since the scheme is backed by the government, the risks are low.
2. Nominees can be added to the account.
3. Deposits can be made via demand draft, online transfer, cheque, or cash.
4. Deposits must be made at least once a year for 15 years.
5. The minimum and maximum amounts that can be deposited in the scheme are Rs.500 and Rs.1.5 lakh, respectively.
6. Tax benefits can be availed.
7. The tenure of the scheme is 15 years.

Difference between FD and PPF

The main differences between FD and PPF are mentioned in the table below:

Calculation of Interest

1. FD - The interest rate that is provided on an FD scheme is constant throughout the tenure. The two different methods by which the interest is calculated are compound interest and simple interest.
2. PPF - The interest rate of the PPF scheme is set by the Government of India. The interest amount that is provided will depend on the balance that is available in the PPF account.

Process to Open a PPF Account

A PPF account can be opened at a bank or post office. The application form and the relevant documents must be submitted in order to open a PPF account.

Process to Open an FD Account

You can open an FD account online or by visiting the bank branch. In case you wish to open an FD account online, you will need to visit the official website of the bank.

In case you wish to open an FD account offline, you will need to visit the bank branch and submit the relevant documents.

PPF vs FD - Which one is Best to Invest?

Both Fixed Deposits and Public Provident Funds offer an extremely safe investment opportunity to individuals, offering decent returns on maturity. The choice of investment boils down to individual requirements, with Fixed Deposits trumping Public Provident Funds in terms of flexibility in term periods and slightly higher interest rates. The fact that individuals can avail loan facilities against Fixed Deposits without having to wait for the three year period as is the case with PPFs makes them a better short term investment option.

Individuals who wish to have both a short term and a long term investment option can choose to invest in both Fixed Deposits and PPFs, provided they have the luxury of time on their side.