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BUDGET 2025 AT A GLANCE||| SOME KEY PROVISIONS

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  BUDGET 2025 AT A GLANCE SOME KEY PROVISIONS SARASIJ MAJUMDER   1.       10,000 additional seats to be inculcated in Medical Institutes in one year; 75,000 additional   medical seats will be created in next 5 years. 2.       100 GW target for Nuclear Power Generation by 2047. 3.       40,000 new houses will be added under Swayam Housing scheme. 4.       50 New Tourists’ destination will be developed by next year . 5.       A Maritime Development Fund with a corpus of ₹ 25,000 crore to be set up, with up to 49 per cent contribution by the Government, and the balance from ports and private sector. 6.       Atal Tinkering Labs (ATL) : 50,000 such labs are to be set up in government schools in 5 years. This is a part of Atal Innovation Mission (AIM). Comment: In my opinion, t...
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PPF Vs. MF

INVESTMENT SERIES—PART 3

SUITABLE FOR YOUNG INVESTORS

SARASIJ MAJUMDER

On this, please refer my blog on MF posted before, for detailed analysis. I am not repeating here.

Public Provident Fund (PPF):

PPF is a government-backed, Debt oriented scheme designed to encourage long-term savings among  Indian citizens. It offers a fixed interest rate and tax benefits, making it a preferred choice for conservative investors.

Features, and Operation:

Any INDIAN CITIZEN can invest in PPF. A PPF account can be opened with either a Post Office or with any nationalised bank. I suggest to open your PPF account in a reputed, and solvent Private Bank. My choice is HDFC, ICICI, or AXIS BANK. KOTAK MAHINDRA is very good—but not investor friendly, as per my personal experience. SBI is the sole default choice if you want a PSU BANK.

PPF comes with a lock-in period of 15 years, promoting disciplined, long-term savings. Hence, you need an emergency fund before investing to PPF. MF, on the other hand mostly are without minimum lock in period. But it shall not be a deterrent for long term investing in PPF.

The government invests the contributions made to the Public Provident Fund (PPF) in a variety of instruments such as government securities, bonds, and equities.

Investment limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or in a maximum of 12 instalments.

Opening balance: The account can be opened with just Rs 100 a month. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax savings.

Deposit frequency: Deposits into a PPF account have to be made at least once every year for 15 years. You are required to make a minimum deposit of Rs.500 per financial year to keep the account active. If you fail to make this deposit, the account will be discontinued. You will have to pay a penalty of Rs.50 along with a minimum deposit of Rs.500 to re-activate the account.

Mode of deposit: The deposit into a PPF account can be made either by way of cash, cheque, demand draft (DD) or through an online fund transfer.

Nomination: A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently.

Joint accounts: A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed.

Partial withdrawal: PPF amount can be withdrawn partially from the seventh financial year onwards.

The government sets the interest rate (currently at 7.1%). The interest earned on PPF is tax-free, making them a very good, nay, most attractive debt investment.

Additionally, PPF contributions are eligible for tax deductions under Section 80C of the Income Tax Act.

Risk and Returns:

While PPF provides capital protection and a guaranteed return, the interest rate is subject to periodic revisions, impacting real returns. However, the low-risk nature of PPF makes it an ideal choice for risk-averse individuals looking for stable, tax-efficient returns.

Mutual Funds:

Overview:

Mutual Funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. Professional fund managers manage them and offer schemes catering to your risk appetite.

Features:

Mutual Funds provide diversification, allowing investors to spread risk across various asset classes. Equity funds offer the potential for higher returns, while debt funds focus on stability and relatively fixed income.

Systematic Investment Plans (SIPs) enable regular, disciplined investing. Mutual Funds in India are regulated by the Securities and Exchange Board of India (SEBI), ensuring transparency and investor protection.

Risk and Returns:

Mutual Funds come with market-related risks, but the potential for higher returns is also significant. The performance depends on the fund manager's expertise and market conditions. Investors should align their risk tolerance with the fund's objective, choosing from categories such as equity, debt, or hybrid funds.

WHAT EMERGE:

Choosing between PPF and Mutual Funds in India depends on individual financial goals, risk tolerance, and investment horizon. PPF offers stability and tax benefits, while Mutual Funds provide diversification and the potential for higher returns.

A highly active investor shall invest in EQUITY.

A moderately active investor shall invest in MF.

PPF is ideal for PASSIVE investors, who earns GOOD, FIXED, TAX FREE returns. The investment becomes partially free after 7 years,

MOST IMPORTANT—AFTER YOU MADE A SUBSTATIAL INVESTMENT OVER A LONG TIME IN PPF, IT PROVIDES GOOD TAX FREE EARNING FROM ITEREST AFTER SUPERANNUATION.

REFERENCE:-

1.0 All information, and data are in PUBLIC DOMAIN. But those are selectively Biased.

2.0 Information, and Data, referred above are distilled by my personal experience of last 50 years, and then POSTED.

3.0 https://sarasij1majumder.blogspot.com/2024/01/seven-mutual-funds-warren-buffetts-buy.html

3.0 Image—GOOGLE/FROM  PUBLICATION RELATED TO PPF//MF.

 

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