Question

Your uncle wants to invest money in Public Provident Fund. Guide him three advantages and three disadvantages of this scheme.

Answer 1

PPF Advantages: 

i. Deposit qualifies for tax rebate. 

ii. Interest earned is tax free. 

iii. Loans may be awaited between 3^rd to 6^th financial year

PPF Disadvantages: 

i. Long term scheme 

ii. Poor liquidity (Pre mature withdrawal is from 7^th year) 

iii. Pre mature closure is allowed only after 5 year.