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We spend a vast portion of our lives trying to make money, working long hours, putting in the extra effort just to make enough money to lead a decent life. Earning money can be a pretty mundane job on occasions, but we still do it, not only for our present but to secure our future as well. In a lot of cases, making the right investment choice becomes harder than actually earning the money itself, with people blowing up their hard earned money on wrong investments. These investments could make or break our future and it pays to choose them wisely. With respect to India, Fixed Deposits and Public Provident Fund (PPF) are two extremely popular investment options, each vying to attract investors with a slew of benefits and features.
Fixed Deposits and Public Provident Fund can be considered as two sides of the same coin, offering multiple benefits while retaining their individual characteristics. So which option is better? Fixed Deposit or PPF? Here are a few points about both of them which might help solve the confusion.
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.
Investors have the option of choosing between two kinds of Fixed Deposits, Bank Fixed Deposits and Company Fixed Deposits. Bank Fixed Deposits can be opened with any bank which offers this facility with benefits including overdraft facility, lock in periods to suit individual needs, etc. All an individual has to do is fill out the application form and submit it to the bank, along with the necessary documents.
Company Fixed Deposits are offered by companies wherein investors can deposit money with the company for a fixed time period. These Fixed Deposits offer a higher interest rate but are considered risky, with returns highly dependent on the company’s performance. Company Fixed Deposits can be opened easily by filling out the application form and providing the relevant documents.
A Public Provident Fund Account can be opened in post offices and select nationalized banks. Individuals need to fill out the application form and submit the relevant documents to open this account. The account can be transferred from the post office to the banks by just submitting a request for the same.
It takes a lifetime of hard work to earn money but a single moment of recklessness can see it disappear. Investing in Fixed deposits or PPFs ensures that our hard work doesn’t go to waste and our money continues to grow stronger, so that it can be there for us when we truly need it. The benefits offered by both FDs and PPFs are unique, and not investing sensibly could very well signal the start of a rapid downhill journey.