Public Provident Fund or PPF has been the go to scheme for investors for many years. Started by the National Savings Organization in 1968 to promote small savings and investments, PPF offers an investment option with decent returns together with income tax benefits under Section 80C.  A PPF account can be opened in only designated bank branches of SBI and its subsidiaries, ICICI Bank, Axis Bank. Other banks where you can open a PPF account include: HDFC Bank, Central Bank of India, Bank of India (BOI), IDBI, Central Bank of India, Punjab National Bank, Indian Overseas Bank, and few others.

What happens to your money in PPF?

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The money invested in a PPF account earns a fixed interest arte. The applicable PPF interest rate for April 1 to June 30, 2019 (Q1 FY 2019-20) has been fixed at 8.0%. This rate is revised every quarter by the government. The interest rate for January - March 2019 was also 8%. Contributions to the account up to Rs 1.5 lakh per annum are tax-free. Interest on the PPF account is also tax-free.

A PPF account matures after the expiry of 15 years from the end of the financial year in which account was opened. In case you don't need the money, the account can be extended in blocks of 5 years at a time. But, what if you have already withdrawn the money even though you didn't need it?

What to do with PPF money?

Srikanth Meenakshi, co-founder and COO, FundsIndia.com told Zee Business Online that the money derived from PPF can be reinvested in mutual funds. The idea here is to allow your money to grow further before you actually need. With mutual funds, the advantage is the you get higher returns with more liquidity. 

There’s an enormous variety in mutual funds that makes it more versatile than other investment options, and to get the best mix of risk and returns. Bank/corporate FDs or post-office savings would be low risk but low return and tax inefficient. Direct equity is very high risk. And if one has to mix all these options, it would be tedious to keep track of multiple investments. With mutual funds, it’s easy to invest in, say, multicap/mid-cap funds for higher returns and temper this with hybrid funds and quality debt funds for stability and lower risk," Srikanth said. 

Also, if you opt for ELSS funds, you can get tax benefit up to Rs 1.5 lakh under Section 8 C. "It’s more tax efficient and more liquid. Plus, tracking investments and effecting changes isn’t complicated," he said.