OTT stocks v/s PPF: Which one to choose and why?
What's the story
Why are people investing more in entertainment (read: OTT platforms) than ever before? Because it's fun and you can't put a price on fun, right?
Well, not quite. While OTT investing might be exciting, traditional options like the Public Provident Fund still hold their allure in India for their security.
This article delves into the nitty-gritty of OTT stocks versus PPF, shedding light on crucial aspects investors should consider.
Market dynamics
Understanding OTT stocks
The popularity of OTT platforms has skyrocketed in India, fueled by rising internet penetration and a rapidly growing digital ecosystem.
By investing in stocks of companies that own these platforms, you can potentially reap significant gains as their expanding subscriber base and revenue drive up their value.
However, keep in mind that these investments can be more volatile and risky than traditional options.
Secure returns
The safety of PPF investments
The Public Provident Fund (PPF) is a government-backed, long-term investment scheme that provides tax-free returns at a rate of interest determined by the government every quarter.
For now, the rate of interest is ~7%.
Both the principal amount and the interest earned are backed by the sovereign guarantee of the Indian government. This makes it one of the safest investment options in the country.
Investment profile
Comparing risks and returns
Choosing between OTT stocks and PPF depends on your risk appetite and investment timeframe.
OTT stocks can deliver high returns quickly but come with market risks and volatility.
Conversely, PPF guarantees stable and secure returns over a long term (15 years) and is ideal for risk-averse investors seeking long-term safety.
Financial planning
Tax implications
Investments in PPF qualify for tax deductions under Section 80C of the Income Tax Act up to ₹150,000 per annum. Plus, the interest earned and maturity amount are tax-free.
On the other hand, gains from OTT stock investments are taxable as capital gains—short-term or long-term based on the holding period—potentially reducing the net returns.
Portfolio balance
Diversification strategies
For investors who want the best of both worlds - growth and stability - in their portfolio, diversifying across OTT stocks and PPF is a smart strategy.
By splitting your money between high-risk, high-return assets like OTT stocks and secure investments like PPF, you can maximize your potential for profit while also having safety nets in place to protect against market downturns.