Lock In period in PPF

 

Lock In period in PPF

Lock-In Period is one of the factors which lot of investors consider while investing money in any scheme.  In Public Provident Funds, the lock in period is 6 years as of now.  This means you can’t withdraw the money before 6 years.  As a matter of fact, you can withdraw your deposited money even before 6 years too in case of emergency, however, you would not be getting any benefit and you may have to close the account altogether.

Lock in Period of PPF

If you have a PPF account, you have to keep investing till six years when you would be able to withdraw some part of money.  Therefore, the lock in period in PPF is six years.  This is the tenure till when you can’t withdraw any amount from your PPF account.

Locking periods have their own benefits.  If your money is locked for few years, that means you would not touch it in normal condition and your savings are growing for future or for unforeseen circumstances.  Otherwise, you may tend to spend the money if there is no lock-in period for your investment.

There are number of wise investors who invest their money in schemes which have a higher lock in period.  The benefit is that they want their money to remain untouched and grow at its own pace.  This is why the ministry of finance is considering increasing the duration of lock-in period in PPF investment from six years to eight years.

One another proposal by the ministry of finance regarding PPF is increasing the total tenure of maturity from 15 years; however, we have not yet seen any development in this regard as of now.  Although, there is already a provision in PPF that after maturity period of 15 years, the investor can further invest the proceed amount in multiple of five years like five years, ten years, fifteen years, twenty years, etc.

PPF is a wise investment scheme for those who want to keep saving little every month for their old age or for any other specific purpose.  PPF investments are completely free of income tax under 80C and this is why it happens to be one of the favorite investment options for middle class investors.

Last but not the least, lock in period of any investment tool is an advantage and the more the lock-in period if the scheme is, the better it is for the investor in a sense that it would provide a long term financial security to the investor and their families.

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