GPF Advantages continued...

General Provident Fund scores on all the benefits.
The main benefits are
1. It does not have any lock in period
2. It is eligible for income tax deduction upto one lakh.
3. The interest earned is tax free

The other advantage of GPF is its ability to act as loaner or as a savings which you can you use as an when need arises.
If you are in urgent need of money for some purpose say a one lakh and more , which you normally will not have in your savings bank account. Neither you can withdraw from other sources which are fetching higher return due to lock in period nor you can keep such amount in your savings bank account therby losing the interest.
GPF rules provide for various conditions in which you take an advance from your accumulation which is repayable and withdrawal which are not repayable.
This benefit saves you from the cost of borrowing like vehicle loan or personal loan which are now around 16%.
which is double than what youn get in PPF, NSC etc.
This is one of such situation wherein though you have money, you cannot use it or you end up foreclsoing your fixed deposit which has the interest applicable for such peroid only+ penal interest charged for foreclosure.
It will not be ideal to redeem your M.F unit which will entail exit charges and it may happen that on the date of your requrement the indices are on red and you cannot wait till the markets to go up.
In above scenerio, GPF is a handy investment you can use it for your reqirement and you can avoid the extra cost.
The advance/withdrawal benefit is available for various reasons like education,purchase of consumables, housing, construction, repair , purchase of vehicle etc.
Hence the investment option available to govt servant in the form of GPF is much better than PPF, NSC etc.
But there may be question that mutual fund investment generates more returns. But remember we do not know what will happen when there is a slump in the market.
It is wiser to put the the eggs in different basket and also in safe basket.
Further GPF also acts like a insurance and a sum to the maximum of Rs .60000 is available to the deceased person's family on death on certain conditions.
I just emphsise that the benefits available in GPF may be fully explored before jumping to other instruments.

we will discuss and discover further.