Public Provident Funds: A saving scheme that may not cater your retirement needs.
aaavvv Public Provident Fund (PPF) is a savings scheme by the Govt. of India which is a savings scheme for term of 15 years. This savings scheme can be done by any Indian resident above 18 years in his/ her name. For minors, the parent or legal guardian can open and operate the account. But the rule is that a person cannot have more than one PPF account. This savings scheme serves as a retirement supporting tool or may cater as a savings dependable savings scheme also. Although it is a scheme of 15 years, if anyone wants to continue with the scheme, he / she can easily do that by extending the period of deposit by 5 years as long as they want. PPF scheme allows a person to deposit a minimum of Rs. 500 and up to a sum of Rs. 1,50,000 in a given financial year. One can also take loans from the money deposited in their PPF account in case of emergency. One more advantage of PPF account is that it gives full income tax benefits and the interest earned from the PPF scheme is also free from any tax.
But PPF scheme has its own demerits also. As it is a scheme for 15 years, it does not provide the option of liquid cash. IN case of any emergency also, one cannot get loan from that account before the completion of seven years. So practically the money gets stuck for seven long years. Another demerit of PPF account is the low upper limit of deposit per year which is Rs. 1.5 lakh. According to surveys, saving Rs. 1.5 lakh a year for fifteen years will not serve any purpose to your retirement. So this is not the most feasible retirement plan.
As the value of Rupee is getting devaluated day by day, only having a PPF account will never be sufficient after retirement. This type of savings scheme is good for short span of time but according to investment gurus, this is not an ideal scheme as tenure is so long and returns are not that fruitful. Another reason of PPF not being the ultimate retirement plan is that its interest rates vary from time to time. Every year this rate changes and on studying the trends of fluctuation of interest rates, the returns may be not that beneficial in this current inflation scenario.
Mudra Loan is a government initiative by which you can take a loan ranging from rs 50 Thousand to rs 10 Lakhs. There is one one loan scheme launched by government of India. This is called Stand Up India. SC St and women entrepreneurs can take loan uto rs 100 laks in this.