Open a PPF account
The Public Provident Fund account offers investors tax benefits and the ability to build wealth. According to the latest Budget, account holders will be able to save up to Rs 1,50,000 every financial year under Section 80C. They get a tax deduction when investing in the account and the interest earned is tax free. On maturity, the entire amount is tax free.
The rate of interest, currently at 8.7% per annum, is compounded annually.
This is an excellent saving vehicle for the long term and young investors should open an account the moment they start earning. Even if they cannot afford to invest up to the limit of Rs 1.50 lakh, they should try to invest as much as possible above the minimum limit of Rs 500.