Here are the reasons to invest in a PPF account for your child.
One of the biggest advantages of a PPF account is its risk-free interest rate. You earn an attractive 7.1% per annum, and since the Central Government backs it, you don’t have to worry about market fluctuations or any risk to your principal amount.
The interest on your PPF balance is compounded annually, which means that your money grows even faster over time. The interest is credited to your account every year on March 31st, giving your savings a significant boost each year.
Another great feature of the PPF is the tax relief it offers. Under Section 80C of the Income Tax Act, you can claim deductions for investments up to Rs 1.5 lakh annually. This helps you save on taxes while simultaneously building a retirement or savings fund.
The PPF is a long-term investment with a lock-in period of 15 years. This ensures that your savings grow steadily over time without the temptation to withdraw funds early. It’s a great way to stay disciplined and focused on long-term financial goals like retirement, education, or marriage.
- Loans Against PPF Balance
If you need liquidity, you can take a loan against your PPF balance between the 3rd and 6th financial year of the account. This option provides you with financial flexibility in case of an emergency while still allowing your PPF investment to grow.
