Is it better to invest in RD than PPF

There are many good and safe investment options available to the citizens of India. These are low-risk investments and offer fixed returns. Two of the most popular investments include the RD or the recurring deposit and the PPF or the Public Provident Fund. Both have their sets of benefits. You need to evaluate the beneficial features of both to understand which is a better investment.

Benefits of an RD investment

Listed below are some of the most beneficial features of an RD:

• Fixed returns -

  One of the biggest benefits of investing your money in recurring deposits is that you get fixed returns. You can use an RD calculator to check your returns before investing to know what you will earn from it.

• Safe -

  The recurring deposit accounts are opened in banks or NBFCs. Both these places are very safe and they keep your invested money protected. As a result, you don’t have to worry about frauds and money losses in any way.

• Attractive rates of interest -

  Most of the Indian banks and NBFCs that offer RDs, offer them at attractive rates of interest. You can earn up to 8.5% interest on RD investments. It is advisable for you to use an RD calculator online to see what rate of interest will fetch you the desired results.

• Flexible -

  Recurring deposits are very flexible in nature. There are no hard and fast rules about the principal amount that you must invest. The time duration of an RD is also customisable and you can choose from between a few weeks to a few months. This flexibility factor makes RD a very handy investment platform.

These are some of the most effective benefits you get when you use an RD calculator to start a recurring deposit.

Benefits of PPF

Now, let us look at some of the benefits of the PPF tax saving investment:

• Easy retirement planning -

  The Public Provident Fund gives you the opportunity to save over a long period of time and build up a healthy retirement corpus. This allows you to stay financially independent till the last day of your life. The PPF scheme compulsorily fixes a portion of your money in an annuity fund. As a result, you continue to earn an income even after you retire and your regular salary stops.

• Tax benefits -

  You can claim a tax benefit of up to INR 1.5 lakhs a year for the contributions you make towards your PPF account. This is an excellent benefit of the PPF scheme and a good reason why you should consider investing in it.

• Online access -

  You can start a PPF account online in just a few minutes. You can also pay your future contributions online and access the fund online at any time. This makes it easy and convenient for you to maintain the PPF account.

• Funds available for emergencies -

  After staying invested in the PPF scheme for three continuous years and making regular contributions, you can make partial withdrawals from your accumulated fund if you are faced with a financial emergency. This is another excellent benefit of starting a PPF account.

These are some very useful benefits that you get when you start a PPF tax saving investment. Keep them in mind and see whether or not they match your financial goals.

Choosing the correct investment

As you can clearly see from the points mentioned above, there are many advantages that both an RD as well as a PPF tax saving investment offer. You need to analyse your requirements, financial capacities and long term economic goals to understand which option is best suited for you.

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