PPF Vs Mutual Fund: What is better for investing in both PPF and Mutual Fund. If the returns in mutual funds are high then it is full of risk. At the same time, if the return is less in PPF, then income tax exemption is available.
PPF Vs Mutual Fund: Public Provident Fund (PPF) and Mutual Fund investments are long term investment instruments. However, PPF is purely a loan-instrument and risk-free investment, whereas mutual funds are market linked. Therefore ‘mutual fund investments are subject to market risk.’ According to experts, ‘Mutual Fund Sahi Hai’ is good for investors who have a high risk appetite, while PPF is a suitable investment tool for the low-risk investor.
If experts are to be believed, both PPF and mutual funds are two different sets of investment instruments, but one should have a diversified portfolio where one should also have a PPF account. How much one should invest in PPF and mutual fund depends on the risk appetite of the investor. If the risk appetite of the investor is high, then mutual funds are a better money making tool for such investors. But, even when the risk appetite of the investor is high, investing in PPF is essential to get assured returns.
Also, other experts are of the opinion that mutual funds are better than PPF for long term investment, because long term mutual fund investment will give at least 12 percent return on one’s investment while the interest rate of PPF is fixed. At present, the interest rate of PPF is 7.1 percent.
But, experts also say that PPF is exempted from income tax, while mutual funds are subject to long-term capital gains tax. PPF investment comes under EEE category. Hence investment up to Rs 1.5 lakh in a particular financial year is tax exempt and interest as well as maturity amount is tax exempt. So, if the market has behaved turbulently in the last few years of mutual fund investment, then in that case PPF investment will be a healer for the investors as it is free from market risk.
