Hi Sreekanth,
Would like to have your insight on this. I want to invest 1.5 lakhs every year in PPF. And this is my very first year opening a PPF account. I read recent updates that the interest rate of PPF has gone down to 8.1% and the projections are that it may go further down. This is not a good news but the fund is backed by Govt and a safe investing all the way. Do you suggest me invest 1.5 lakhs every year for next 15 years and and too locked down the whole period? One big upcoming change in my life would be that i may start working in the US by this year end and continue living there for next few years (Then planning to come back).
Currently there is some law prohibiting US residents from investing in Indian mutual fund sector, so I am guessing I may not be able to divert my surplus to MF while I am there. Given this scenario, can PPF be my best option to park 1.5 lakhs every year for 15 years? (given an NRI can invest in PPF as long as the account was opened before becoming an NRI). or any other better investment instrument you think I can make better use of it?
3 Answers
Dear Kumar,
Yes, the interest rate on PPF has been reduced and henceforth the interest rate may vary every quarter. But kindly note that PPF is a very long-term savings scheme (15 year) and the interest rates keep varying (can increase also in the next 15 year period).
So, you need to kindly let me know the reason for choosing PPF? Do you have any other existing investments? May I know your age and financial goal(s)/obligations (if any)?
Regarding MF investments & US NRIs : Kindly read this article - 'FATCA Compliance & NRI MF investments'.
Yes understanding is correct, "if an Indian national opened a PPF account and managed it successfully during the stay and later became an NRI, then he/she can continue to contribute to their respective PPF account in the same manner as they did before. They would also enjoy the same tax benefits as they did earlier."
Dear Kumar,
PPF is one of the best savings scheme. If your priority is to choose safe and something from non-equity basket then its a good long-term savings product. It is also a tax efficient one.
Suggest you to consider buying a stand-alone Personal Accident cover too.
Read: Best Personal Accident Insurance plans.
(Above reply is based on your PRIVATE question)
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