Public Provident Fund has an initial lock-in period of 15 years. Once it matures after 15 years, the following are the guidelines that can be employed:
- Age and retirement time – If age is greater than 60 or if one is already retired and one does not have sufficient retirement income – Then one can invest 15 Lakhs of the proceeds in Post Office Senior Citizens Scheme. returns won’t be great, but considering that nothing else can give 7+% returns, you can live with the returns. The rest can be invested in liquid funds for immediate needs.
- If age is less say around 40s, and you have been regularly investing in PPF early on – please continue the PPF for the next 5 years slab and continue investing max amount if possible. The compounding that happens on a large base is something you can never get anywhere. This is the safest bet in 5 years.
- If you somewhere in between in age and don’t have enough investments, I would suggest extending the PPF for another 5 years, since this situation means that you have not planned your financials or have other issues that force you not to plan finances. So it is better to play safe
- If you are having enough wealth created out side of PPF, you want to extend or redeem the PPF based on your current demands.
Originally posted by the Author on Quora.