Why to open a PPF account even if you dont need it right now

In this article we will see why one should should open a PPF account even if one does not need it or have no intention of putting his money in Debt , It may look idiotic , but we will see why it would make sense . We will also see an example which will help you understand things .  Imagine a situation, You need to invest your money in some debt product which gives you assured and good returns , but you don’t want it to get locked for long period , the maximum you want is 3-4 yrs of lock in . Is it possible right now is the question you need to ask ? NO!! is the Answer

• If you invest in PPF right now , the money will be locked in for 15 yrs (partial withdrawals allowed)
• If you invest in NSC , it will be locked for 6 yrs , but the interest would be taxable and hence your post-tax returns are again very less .
• Fixed Deposits are again not helpful , because there post-tax returns are not attractive enough . Even if you Choose the best Fixed Deposit , it wont help you .
• Debt funds are again not answer , because again there post-tax returns are less .

So how does opening a PPF account now helps us ?

Well, Definitely it cant help us at this moment , But imagine future , Lets say after 11 or 12 yrs , you need to invest some money for short term , at that time , you can put money in your PPF account and it will get matured in next 3-4 yrs and whole maturity amount would be Tax-free and earn you interest of 8% .

And it costs just Rs 500 per year for account to be active . So If you need the PPF account right now , Open it now and if you don’t need it right now , still Open one right now so that your Lock In period goes down by 1 every year . Also once in a while when ever you feel that you need your money to go in your Debt component , just use PPF and put your money into it . 

So here is what I would suggest , Open PPF accounts on your name , your Spouse name , and your Children name at the interval of every 2-3 yrs , so that after 12-13 yrs , you have each PPF account maturing in a period gap of 2-3 yrs and you can use it as a investment product which gives 8% assured tax free returns .

Note : PPF returns are subject to change and is fixed by govt every year also .