The Public Provident Fund (PPF) has long stood as a cornerstone for long-term savings and tax benefits, offering investors a secure and tax-efficient option under Section 80C of the Income Tax Act. With its minimum tenure of 15 years and the flexibility of limited partial withdrawals, PPF has become a go-to choice for individuals looking to amass a substantial corpus. However, once your PPF account matures and immediate funds aren’t required, there are various investment options available to manage the corpus effectively.
Continuation Without Fresh Deposits
One important aspect to note is that it’s not mandatory to close the PPF account upon maturity. Investors have the option to keep and extend the account without making further deposits. By doing so, they continue to earn applicable interest annually without tax liabilities. Additionally, tax-free withdrawals are permitted from the available balance. However, if the account is continued without fresh deposits for a year or more post-maturity, the option to restart fresh deposits is forfeited.
Extend the Tenure
For those who wish to continue with the PPF account and make further deposits, an extension in blocks of five years is available, which can be further stretched with similar periods. To avail of this option, PPF investors must inform the bank or post office within a year of maturity. Failure to do so results in the inability to make fresh deposits, but the balance will continue to accrue yearly interest.
Reinvesting the Corpus
Another option upon PPF maturity is to close the account and receive the total proceeds in the savings account. If the funds are not immediately needed, it is advisable to reinvest the proceeds in alternative avenues to maximize returns. Depending on the risk profile, investors may consider the following options:
Debt Funds
For individuals with a low to moderate risk appetite, debt-oriented hybrid mutual funds can be considered. These funds typically invest 65-75% of assets in debt, providing stability with an additional push from the equity portion.
Balanced Advantage Funds
Investors with a moderate to high risk profile may opt for dynamic funds that can adjust allocations between debt and equity based on market valuations. These funds have the potential to yield returns of 8-12% in the long run.
Flexi Cap, MultiCap & Multi Asset Funds
For those comfortable with some investment risks, equity funds that diversify investments across different company sizes in the market can be explored. Flexi Cap, MultiCap, and Multi-Asset Funds offer various strategies, combining debt, equity, gold, and real estate for potential higher returns over the long term.
Adhil Shetty, CEO of Bankbazaar.com, emphasizes the importance of sensibly managing the money accumulated through PPF investments. Whether nearing retirement or in the prime of one’s career, making informed decisions about reinvesting can lead to higher returns and the effective use of the hard-earned PPF corpus.
In conclusion, these strategies aim to guide individuals towards earning higher returns and optimizing the use of their PPF corpus, ensuring that the funds do not remain idle and instead grow over time.
