Public Provident Fund

PPF meaning can be simply stated as a long-term investment scheme, popular among individuals who want to earn high but stable returns. Proper safekeeping of the principal amount is the prime target of individuals opening a PPF account.

When a PPF scheme is opened, the PPF account is scheduled for the applicant where the money is deposited every month and interest is compounded.

Importance of a PPF Account
A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this plan is mandated by the government, it is backed up with guaranteed returns to protect the financial needs of the masses in India. Further, invested funds in the PPF account are not market-linked either.
Investors can also undertake the public provident fund regime to diversify their financial and investment portfolios. At times of downswing of the business cycle, PPF accounts can provide stable returns on investment annually.
Investment Tenure
A PPF account has a lock-in period of 15 years on investment, before which funds cannot be withdrawn completely. An investor can choose to extend this tenure by 5 years after the PPF lock in period is over if required.

Principal Amount
A minimum of Rs. 500 and a maximum of Rs. 1.5 Lakh can be invested in a provident fund scheme annually. This investment can be undertaken on a lump sum or installment basis. However, an individual is eligible for only 12 yearly instalment payments into a PPF account. Investment in a PPF account has to be made every year to ensure that the account remains active.

Loan against Investment
Public provident funds provide the benefit of availing loans against the investment amount. However, the loan will only be granted if it is taken at any time from the beginning of 3rd year till the end of the 6th year from the date of activation of the account.