Travel fund v/s PPF: Which one to choose?
What's the story
In the world of personal finance in India, people (read: millennials) are often confronted with choices that mirror their lifestyle aspirations and dreams.
One such decision is whether to save money for travel or invest in a Public Provident Fund. It's a tough call.
This article explores the pros and cons of both options, offering clarity to help you make the best decision.
Longevity
Understanding PPF as a long-term investment
The Public Provident Fund (PPF) is one of India's most popular long-term investment options. It offers tax-free returns with a decent interest rate of around 7% to 8%.
With a 15-year lock-in period, it provides a strong savings foundation for retirement or other long-term objectives.
The power of compounding interest, combined with tax benefits under Section 80C, makes PPF a highly attractive choice for risk-averse investors.
Wanderlust
The allure of travel funds
Creating a travel fund addresses the growing wanderlust among Indians to discover new places and immerse themselves in different cultures.
Unlike PPF, the returns here can't be measured in a fixed percentage, the true value comes in the form of experiences and memories that last a lifetime.
Travel fund demands saving discipline but provides flexibility with no lock-in period, ensuring funds are readily available for impromptu getaways or well-planned holidays.
Flexibility
Comparing flexibility and accessibility
Travel funds are way more flexible and accessible than Public Provident Fund.
While PPF investments are locked in for 15 years with limited withdrawal options before maturity, travel funds can be accessed any time.
This makes them perfect for people focusing on short-term goals or those who like to have immediate access to their savings.
Taxation
Tax implications worth considering
PPF contributions benefit from an EEE tax status, meaning deposits up to ₹1.5 lakh are deductible under Section 80C, and both interest earned and withdrawals are tax-exempt.
In contrast to PPF, travel funds do not offer direct tax benefits, which is a crucial consideration for individuals looking to maximize their tax savings.
Balance
Tips on balancing both aspirations
For those whose hearts yearn for both far-off lands and the comfort of a well-padded bank account, balance is the secret sauce.
By splitting your income between PPF and a travel fund according to your priorities, you're building that long-term safety net while still making room for short-term fun.
The beauty of this method is that you're not sacrificing one dream for another.