Open an Account
Trade Now
  • Markets
  • Products
  • Research
  • Partner with us
  • Blog
  • Refer A Friend
Open an Account
Trade Now
  • Markets
  • Products
  • Research
  • Partner with us
  • Blog
  • Refer A Friend
Home » Blog » Saving Schemes » PPF vs. Mutual Fund: Know the Difference
Religare Broking by Religare Broking
May 2, 2024
in Saving Schemes
0

PPF vs. Mutual Fund: Know the Difference

Types of Mutual Funds
  • Last Updated: May 02,2024 |
  • Religare Broking

Investing your hard-earned money can be an intriguing experience. Particularly, for the new investors. However, acquiring some basic knowledge and professional advice can help you make confident investment decisions. Equity investments carry high risk high rewards potential. So, you need to employ techniques like diversification and balance the portfolio risk. Two popular investment instruments for balanced returns are the Public Provident Fund (PPF) and Mutual Funds. They are largely considered safe investments as they offer decent returns from the market linked investment instruments.

Let’s analyze PPF and Mutual Funds and understand which one is a better fit for your financial goals.

    Topics Covered:

  • Understanding PPF and Mutual Fund
  • PPF vs Mutual Fund: Which is Better
  • Conclusion

Understanding PPF and Mutual Fund

Public Provident Fund (PPF)

The PPF is a government-backed, long-term savings scheme designed to encourage individuals to save for their retirement. It offers a secure and tax-efficient path to invest for your retirement. Here's what you need to know about PPF:

Safety

Public Provident Fund is one of the safest investment instruments in India, as it is backed by the government of India. Your returns are guaranteed as per the prescribed interest rate.

Interest Rate

The rate of interest on PPF is announced quarterly and is often competitive compared to other fixed-income investments

Lock-in Period

Essentially a retirement planning tool, PPF comes with a lock-in period of 15 years. However, partial withdrawals and loans are allowed after a certain period. Compared to mutual funds, the PPF lacks liquidity.

Tax Benefits

Contributions made to PPF are eligible for tax deductions under Section 80C of the Income Tax Act. Plus, PPF enjoys exempt, exempt & exempt status i.e total contributions, interest earned and maturity amount all are tax free.

Mutual Funds

A Mutual fund is a large pool of money that gets funds from multiple investors and invests it in a diversified portfolio of stocks, bonds or other securities. Some of the key features of mutual funds are:

Diversification

Mutual funds spread your investments across various assets and substantially reduce risk of investing in direct equity, as in case of stocks.

Professional Management

A team of professional fund managers actively manages mutual funds.

Liquidity

Mutual funds offer high liquidity, allowing you to buy or sell units at the prevailing Net Asset Value (NAV) on any business day.

Returns

Mutual funds are also market linked products and thus returns are not fixed or guaranteed. The returns depend on the performance of the underlying assets, and thus varies.

Tax Benefits

Some mutual funds offer tax benefits under Section 80C, like ELSS (Equity-Linked Savings Schemes).

PPF vs Mutual Fund: Which is Better

Now that we have a basic understanding of PPF and Mutual Funds, let's compare these two investment instruments.

Capital security & Returns

PPF offers guaranteed returns, making it a safe option for risk-averse investors. While, the mutual funds come with market-related risks and returns are not guaranteed. The safety of your investment depends on the type of mutual fund you choose to invest in.

Additionally Read: Demat Account Meaning

Lock-in Period and Liquidity

PPF has a lock-in period of 15 years. While partial withdrawals and loans are allowed, it is not as liquid as mutual funds. Mutual funds have no fixed lock-in period, offering you flexibility to withdraw as per your needs. You can buy or sell mf units any time.

Returns

PPF offers a fixed interest rate that is subject to change quarterly. Mutual funds have the potential for higher returns but also come with higher risks. The returns depend on the market performance and the fund's portfolio.

Recommended Read: Consolidated Account Statement

Tax Benefits

Both PPF and certain mutual funds offer tax benefits under Section 80C. However, in the case of mutual funds, returns are subject to taxation basis holding period and sum of amount.

Diversification and Professional Management

Mutual funds provide diversification and access to professional fund management, which can help you spread risk and potentially increase returns. PPF does not offer the same level of diversification or professional management. However, returns are fixed and safe.

PPF vs. Mutual Funds: An Overview

Aspect

Public Provident Fund (PPF)

Mutual Funds

Type

PPF is a government-backed, long term retirement saving scheme.

Mutual funds are a pool of funds managed by professional fund managers.

Risk

No / Low risk

Risk varies, depending on the type of fund.

Returns

Fixed interest rate (updated quarterly)

Market-driven, potential for higher returns

Liquidity

There is a lock-in of 15 years. Limited withdrawals allowed. 

Generally liquid, can be bought and sold even daily.

Tax Benefits

EEE (Exempt, Exempt, Exempt):
Contributions, interest earned, and maturity amount all are tax-free

Tax implications based on the type of fund and holding period

Investment Options

Limited to PPF account

Diverse options like equity, debt, hybrid, etc.

Control and Flexibility

Limited control, fixed investment amount

High control, flexibility to adjust investments

Risk Tolerance

Suitable for risk-averse investors

Suitable for various risk profiles

Purpose

Typically used for retirement planning and, long-term wealth creation

Various goals including wealth creation, retirement, education, etc.

Conclusion

There is no one-size-fits-all answer. Your choice of investment option should align with your financial goals, risk tolerance, and investment horizon. If you prioritize safety and tax benefits with a long-term view, PPF is a better option. On the other hand, if you seek potentially higher returns and can handle market fluctuations, mutual funds might be a more suitable choice. It's often a good idea to consult a financial advisor to tailor your investments to your specific needs. Remember that a well-rounded investment portfolio can include a mix of both PPF and mutual funds to balance safety and growth potential.

Comparing PPF (Public Provident Fund) with mutual funds involves assessing factors like risk, return potential, and liquidity. Gain insights into these investment options and manage your portfolio effectively through an online demat account, providing access to both PPF and mutual fund investments for diversified wealth management.

Religare Broking

Religare Broking

Religare Broking: Online Trading of Stocks, Commodities and Mutual Funds in India

Related Posts

Retirement Planning: How to Invest for Your Future
Saving Schemes

Retirement Planning: How to Invest for Your Future

May 07,2025

types-of-tds
Saving Schemes

Types of TDS to Know in India

Sep 10,2024

types-of-investments
Saving Schemes

What are the Different Types of Investment Options?

Sep 10,2024

Buy Now Pay Later
Saving Schemes

NPS Tax Benefits: Maximize Your Savings with Smart Investments

Jul 31,2024

Best Gold Stocks in India 2025
Saving Schemes

National Pension System – Invest Smart, Retire Smart

Mar 18,2024

Invest in Cash Rich Companies
Saving Schemes

NPS Investment Options – Auto Choice and Active Choice

Mar 18,2024

Disclaimer:This blog is written exclusively for educational purpose. Any stock mentions in the blog are examples and not recommendations. Please refer to our research reports or analyst recommendations for stock ideas.

No Result
View All Result

Open a Free Demat & Trading Account

Please enter valid name
Please enter valid phone

Category

  • Income Tax (1)
  • Commodity Trading (16)
  • Saving Schemes (12)
  • Derivatives Trading (80)
  • Currency Trading (4)
  • TradingView (2)
  • Margin Trading (2)
  • National Pension Scheme (2)
  • Algo Trading (2)
  • Stock Market (166)
  • Online Share Trading (103)
  • Demat Account (38)
  • Mutual Funds (45)
  • IPO (26)
  • Indian Market & Economy (8)
  • Income Tax (15)
  • Uncategorized (1)

Popular Blogs

Discover the Best Investment Products for High Returns
PPF vs. Mutual Fund: Know the Difference

Latest Blogs

Top ETFs In India
Top Gold ETFs in India
Highest Dividend Yield Stocks In India
What Are the Best Swing Trading Strategies?
Option Trading Strategies for Experienced Traders in 2025
Top Risk Management Techniques for Active Traders
How to Select Stocks for Swing Trading
Scalping vs Day Trading: Which Strategy is Best for Fast Gains?
IPO GMP – Latest IPO Grey Market Premium
Stock Market for Beginners: Ten Great Ways to Learn Stock Trading
Learn More About Saving Schemes


Markets

  • Stock Market Live
  • Derivatives
  • Commodities
  • Currency
  • Upcoming IPO
  • Listed IPO

Products

  • Overview
  • Equity
  • Derivatives
  • Commodities
  • Currency
  • Margin Trading Facility
  • IPO
  • IPO GMP

Services

  • Tin FC
  • NPS
  • DSC
  • Open Demat Account
  • Open Trading Account

Research

  • Investment Ideas
  • Trading Calls
  • Research Reports
  • Blog
  • Knowledge Centre
  • Stock Market Holidays
  • NSE Holidays
  • BSE Holidays

Support

  • Contact Us
  • Locate Us
  • Downloads
  • Margin Calculator
  • Margin Matrix
  • Feedback
  • Activation Key
  • Demat Account FAQs
  • Trading Account FAQs
  • About Us
  • Notification
  • Disclaimer
  • Privacy Policy
  • Terms Conditions
  • Rules Regulations
  • Corporate Information
  • Educational Note For Clients On PMLA
  • Partner with Us
Important Links
  • NSE
  • BSE
  • SEBI
  • MCX
  • NCDEX
  • MSEI
  • NSEL
  • IRRA
Investor Complaints
  • NSE
  • BSE
  • MCX
  • SEBI
  • SEBI SCORES
  • NCDEX
  • MSEI
  • SMARTODR
E-Voting Facility
  • NSDL
  • CDSL
Upcoming IPO
  • OYO IPO
  • Yatra Online IPO
  • Ixigo IPO

Unified Portal Version No.1.0.0.2

Copyright 2010 Religare. Trademarks are the property of their respective owners. All rights reserved. Religare Broking Limited (CIN: U65999DL2016PLC314319), Registered Office: 802-815B, 8th Floor, Gopal Das Bhawan, 28-Barakhamba Road, Connaught Place, New Delhi -110001
Telephone No.: +91-011-49871213 | Fax: +91-011-49871189
E-mail: wecare@religareonline.com

Member Religare Broking Limited (RBL) : SEBI Regn. No. INZ000174330 NSE CM, F&O, CD TM Code: 06537 Clearing Member (F&O) No. M50235; BSE CM, F&O, CD, CO Code: 3004 Clearing No: 3004; MSEI CM, F&O, CD, TM Code: 1051 | MCX Membership No. 56560 | NCDEX Membership No. 01276 | AMFI-registered Mutual Fund Distributor ARN No.139809.

Member Religare Commodities Limited (RCL) : Regn No. MCX 10575 | NCDEX 00109|NeML 10042|NSEL 10180 |SEBI Registration No. MCX/NCDEX :INZ000022334.

Depository Participant : Religare Broking Limited (RBL) - NSDL: DP ID: IN 301774 | SEBI Regn. No: IN-DP-385-2018 | CDSL DP ID: 30200 | SEBI Regn. No: IN-DP-385-2018

Religare Broking Limited(RBL) : Research Analyst SEBI Regi. No : INH100006977

Religare Broking Limited(RBL) : Registrars to an issue and share Transfer Agents (RTA) - SEBI Regi. No : INR000004361

Religare Broking Limited(RBL) : Corporate Agent (Composite) - IRDA Regi. No : CA0581

Religare Broking Limited(RBL) : National Pension System - Point of Presence (NPS-POP) - PFRDA Regi. No : POP01092018

Advisory for Investors

  • Investor Charter Stock Broker
  • Investor Charter Research Analyst
  • Investor Charter of Depository Participant
  • Advisory KYC Compliance
  • Investor Charter of Registrars to an issue and share Transfer Agents (RTA)
  • For Reporting of Cyber attack/incident Click here..!!
  • Details of Client Bank Accounts of Religare Broking Limited
  • How to Link Your Aadhaar Number with Demat Account
  • How to link Aadhaar Card with your PAN Card
  • How to Open a Demat & Trading Account Online
  • Member Details
  • SOP - Centralized mechanism for reporting the demise of an investor through KRAs
  • SEBI Investor Website
  • Quiz-NFL-Banner

ATTENTION INVESTOR

-- Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

-- Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.

-- 20% upfront margin of the transaction value to trade in cash market segment.

-- Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.

-- Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

-- Prevent unauthorized transactions in your account - Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day - Issued in the interest of Investors.

-- Prevent Unauthorized Transactions in your demat account Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from Depository (NSDL/CDSL) on the same day issued in the interest of investors.

--If you have any grievance you may reach Religare Broking Limited at igreligare@religare.com & Religare Commodities Limited at ig.commodities@religare.com.
If the complaint does not get redressed within 30 days, the complainant may use SCORES to submit the grievance.

--Filing complaint on SEBI SCORES – Easy & quick
a. Register on SCORES portal.
b. Mandatory details for filing complaints on SCORES - Name, PAN, Address, Mobile Number, E-mail ID.
c. Benefits - Effective Communication & speedy redressal of the grievances

-- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investors account.

-- KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.

-- Trading and Demat Accounts opened under Insta Plan will not be eligible for dealing through branches.

-- Please note that by submitting your mobile and email on our website, you are authorizing us to Call/SMS/Whtsapp/RCS/Email you even though you may be registered under DNC. We shall Call/SMS you for a period of 12 months.

No Result
View All Result
  • Products
  • Research
  • Career
  • Partner with us

© 2021 RELIGARE -Designed By Religare.

Open Demat Account
Please enter valid name
Please enter valid phone

Open a FREE Demat
& Trading Account

Invest in Stocks, IPOs, F&O &
Mutual Funds

Please enter valid name
Please enter valid phone
religare logo

Get better recommendations, Make better investments.

Daily Stock Suggestions from Leading Experts!

By signing up, you agree to receive updates on SMS, Email & WhatsApp