PPF Account for Children: Public Provident Fund (PPF) is considered the best way to grow wealth at a fixed rate and save tax. The sooner it is started, the more beneficial it is. Hence experts believe that parents should open PPF account for their children as well. However, there are some things in it that will get maximum benefit only if taken care of.
First of all, know that continuity in PPF account is very important. If you invest in PPF for some time and then stop it, it will not be of much benefit. The scheme has a lock-in period of 15 years and is tax-free and offers compound returns. At present, the interest rate on PPF is 7.1 percent.
As per the Public Provident Fund Scheme, 2019, a parent or guardian of a child can open a PPF account in the name of his/her minor child. Only one account can be opened in the name of an individual. Tax experts say that both parents or one parent can deposit any amount in PPF for a minor child.
There are many advantages of opening a PPF account in the name of a minor.
1) The biggest feature of this account is the lock-in period of 15 years. The child can decide to continue or close the account when the child turns 18. This is the best investment plan for a child. However, the lack of liquidity in this account is a major problem.
2) Even if you want to see tax benefits, PPF is the best option. However, each person can open a maximum of one PPF account in a post office or bank and a maximum of Rs 1.50 lakh can be deposited in it in a financial year.
3) Investors in Public Provident Fund get the benefit of compounding. Due to compounding, a large amount is received in the long run. There is no risk involved in this instrument as the income is assured. At present, the interest rate of PPF is 7.1 percent. Earlier also its rate has been different. In the last 10 years, PPF holders have got returns ranging from 7.1 per cent to 8.8 per cent.
4) From April 1986 to March 31, 1988 and from April 1, 1988 to January 14, 2000, investors got 12 percent interest on PPF. At one time this scheme was giving 12 percent interest, whereas now the interest rate has come down to 7 percent. If you want to take maximum advantage of this scheme, then you should open an account from an early age.