Hello everyone, i wanted to know is it safe to invest in PPF compared to mutual funds?
Okay, let me help you with your question.
Is PPF Safer than Mutual Funds?
I had the same question when I started saving. If you don’t know, PPF is backed by the Government of India so it is very for investments. Your money is secure and it earns a fixed interest. Also, the maturity amount is tax-free. There is no market risk in PPF.
While the Mutual fund depends on the stock market. They can give much higher returns than PPF but they also carry risk. Sometimes the market goes up and your money gains high interest but sometimes it can go down too.
So PPF is safer. If you are okay with some ups and downs for higher returns, mutual funds are better. Many people actually invest in both PPF for safety and mutual funds for growth.
PPF vs Mutual Funds
| Feature | PPF (Public Provident Fund) | Mutual Funds |
|---|---|---|
| Safety | Very safe (Govt-backed) | Market risk involved |
| Returns | Fixed (7–8% approx.) | Variable (can be 6–15% or more) |
| Tax Benefits | Eligible under 80C (up to Rs.1.5L) | ELSS eligible under 80C (Rs.1.5L) |
| Lock-in Period | 15 years | 3 years (for ELSS), flexible for others |
| Liquidity | Limited withdrawals after 7 years | High liquidity (except ELSS) |
| Best For | Risk-averse, long-term savers | Investors seeking higher growth |
If safe you meant the risk in PPF is lower than MFs, then yes PPF is far more safe then MFs but the down side is the returns are also very less compared to MFs
Example: PPF interest Rate is 7.1% as of today, and equity MFs usually give 10% to 12% returns. So you have to decide what is the purpose of the investment and the time horizon for the same.