PPF (Public Provident Fund) Account Investment Disadvantages

By | April 6, 2022

Information on PPF (Public Provident Fund) Account Investment Disadvantages

Check out some of the disadvantages of PPF account Search on the Public Provident Fund account towards the withdrawal rules, locking period, and the maturity benefits

Citizens of India consider PPF as the most trusted saving instrument But there are some of the disadvantages of this most trusted saving stream So before investing in the instrument awareness about the disadvantages is also very important Here given are some of the disadvantages of PPF account

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Lowest interest Rates

  • Depending upon the saving instrument the interest rates of the PPF account are offered  and it all depends upon the market rates As linked to the market the interest rates are totally variable
  • The Interest rate Followed for the PPF account initially was 12% which is now reduced to 8% is nearly equal to fixed deposit rate offered by the banks and the Interest rates are constantly decreasing over time or will decrease even more as the government itself has invested in small saving instrument and it is not expected to improve in future

Options for PPF Withdrawal

  • With respect t to money withdrawal, PPF have a number of drawbacks as the account gets locked for a huge period of 15 years although loan facilities and partial withdrawal options are somehow available
  • Only for the 3rda and 6th financial year loan facility is available And the provided loan is 15% of the amount saved till the end of the 2nd financial year is very low The loan is provided to EPF subscribers in the 3rd year but is to be applied in 2nd year
  • On the 7th Year of the account the capping amount can be withdrawn
  • By the end of the 4th Financial year, PPF subscribers can withdraw 50% of the accumulated amount  or the 50% account balance by the end of the previous year
  • A person can minimum withdraw two amounts and there are a number of limitation for PPF accounts in terms of withdrawal

Cap on Upper Investment

  • To get the tax benefit and avail assured returns a cap amount can be invested in PPF and only 1.5 lacs can be invested as the maximum amount which is unable to fetch a high corpus at the end of the maturity period
  • For the person who targets big corpus at the end of the maturity period, PPF is not a good option

PPF Account Co-Ownership

  • In the name of multiple family members, most of the saving instruments including Fixed deposit and mutual funds are provided as saving options which help it portray transparency as a family saving option  But this option is not provided by PPF
  • A joint PPF account can not be possessed but The persona and wife can only have their individual PPF accounts

PPF Account cannot be opened by NRI’s

  • One of the main disadvantages is that the PPF account can not be possessed by non-resident Indians
  • But if a person possesses a PPF account as an Indian citizen and now has moved to another country  he can continue using the account and avail of the benefits

Online Facilities

  • As it is the most trusted investment source, the options for online transaction and online amount checking must be available
  • The PPF account may be opened by the individual through the post office and banks The online facilities are provided by the banks but not by the post offices

PPF Account HUF’s

  • The Hindu Undivided families were earlier allowed to open PPF accounts but now HUF’s can’t avail the option to open a PPF account

Before investing in a PPF account these are some of the disadvantages that need to be checked Among many the Saving instrument is considered to be the safest as it offers tax benefits to the account holders Check all of the options available and take the right decision to open PPF account

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