Is PPF a good tool for future retirement planning? - Study24x7
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22 Jul 2022 10:31 AM study24x7 study24x7

Is PPF a good tool for future retirement planning?

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  • Dev kumar

    • It is crucial to first comprehend the motivations and goals of PPF investment. India lacks a social security system, in contrast to western nations, where the government offers a set amount of money after a specific amount of time, like 65 years or so. It is crucial for people in India to save money for their retirement years because they will have high living expenses and no source of income. With hefty medical expenses and meagre income, old age is typically intimidating for a lot of people. Building a reliable retirement fund is therefore crucial, and PPF investments are the ideal tool for doing so.
    PPF is only a debt-based investment. The risk and profit are therefore low. A PPF investment up to Rs. 1.5 lakh per year is tax-free. Interest on investments, cumulative balances, and withdrawals are all tax-free. This tax break is effective right now. The 15-year lock-in period, which prevents subscribers from typically withdrawing and therefore defeating the aim of long-term investment, is a plus. PPF investments are still permissible after 15 years. Therefore, there is no need to stop using it after 15 years.
    PPF and ELSS investments are not equivalent. ELSS is an equity investment, while PPF is a debt investment. In ELSS, the risk and reward are higher. The aim of long-term investing is defeated by ELSS's shorter lock in period of three years. The majority of investors sell their ELSS investments after three years, which undermines investing discipline.
    It's useful to invest in PPF for the above reasons, more so if it is not withdrawn and spent after 15 years.

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    Reply 26 Jul 2022 11:52 AM
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