PPF vs Mutual fund- What is the Right Choice?

byPriyanka JuyalLast Updated: August 17, 2022
PPF vs mutual funds

PPF vs Mutual fund- where to invest is a common question among investors. Both have their own set of advantages, disadvantages, features, maturity period, tax benefits, and so on. Because of the popularity and significance of PPF and mutual funds, it is essential to understand the differences between the two before investing.

In this blog, we will look at the differences between PPFs and mutual funds, as well as the benefits and where to invest.

What is the difference between Mutual funds and PPF or Public Provident Fund?

PPFs and mutual funds each have their own set of advantages and disadvantages, as well as features that can provide users with multiple benefits. As a result, before selecting one at random, it is a good idea to consider the differences between them.

ParametersMutual FundsPPF
Investment run byFund houses or Asset management companiesBy Government of India
RequirementsTo meet short or long terms goalsTo build a retirement corpus
Return on investmentsThe return is determined by the performance of the underlying assets.The returns are calculated on an annual basis.
Tax benefitsIt is determined by the type of mutual fund investment and the duration of the investment.PPF investments are tax-free up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
Maturity PeriodNo fixed tenure15 years, can be extended in the blocks of 5 years
LiquidityA high degree of liquidityLow degree of liquidity
Risk/safetyRiskier than PPFsPPF is a risk-free investment
Lock-in periodNo concrete lock-in period15 years
Premature withdrawalCertain mutual funds have a lock-in period; in such cases, SIP payments can be stopped but withdrawals are not permitted before the maturity date.Partial withdrawal is allowed only after the completion of 6 financial years

PPF vs Mutual Funds- What to choose next?

Mutual funds vs. PPFs Both are highly debatable due to their various drawbacks, benefits, features, tax advantages, maturity periods, and so on. Before selecting one of the two, it is critical to understand what each offers the investor, as well as the time period required to keep the invested amount until maturity. Aside from that, it is critical to determine whether or not the investment scheme provides a partial withdrawal facility. Before deciding, it is important to understand your personal needs, financial goals, and other factors. Expert advice can help you make a better decision.

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