Investors have been using both PPF and Mutual Funds to achieve their long-term financial goals. They are both long term investment instruments.
But apart from that basic similarity, they differ on various other facets and serve investors with varied goals. Let us take a look at what suits you best in the long term.
Public Provident Fund
PPF stands for Public Provident Fund. It is a tax exempted savings instrument that lets people save a portion of their annual income for the future.
Investors of PPF can earn interest income on their principal which is not taxable.
PPF is a saving instrument for risk averse people and is backed by the government.
Some benefits of the PPF scheme are:-
Mutual funds are financial instruments in which investors chip in their money and it is managed by professionals. The money collected from all the investors is invested collectively.
Some benefits of Mutual Funds are
Dilshad Billimoria, Board Member of the Association of Registered Investment Advisors (ARIA), told Business Today that investment decisions should be made keeping in mind the risk appetite and the financial goals of the investors. She said, “Investing decisions should be based on risk profile of an individual, goals, and time horizon of the investment.”
She further explained that, “Both PPF and Mutual funds are a great option from the asset allocation point of view because PPF caters to Fixed Income and Mutual funds have equity debt, gold, and multi asset options.”
She concluded by saying, “The decision to invest in a particular asset class should be after considering the above parameters.”
Also read: NPS vs PPF- Where to invest next?
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