The first place to invest in April: The safest savings instrument in India

The Public Provident Fund (PPF) Scheme is a statutory scheme provided by Government of India. This is probably the safest savings instrument one can get. The Scheme is for 15 years and can be extended in 5 year increments. The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year. A year for the purpose of the Scheme means a financial year (1st April to 31st March).

PPF provides 8% interest compounded annually. More interestingly, it's an EEE mode of investment and has triple tax benefits: 80C provision, interest earned is not taxable, and withdrawal is tax exempt. There are other benefits, but don't worry about it. Okay, if you think this government scheme cannot be attractive, Think Again! It's a clean 8% tax free return Mister! That's correct, there are no maintenance fees, no hidden fund management charges, and the returns is all for you to keep. All of it! If it's still not obvious, then consider this: This 8% return is equivalent to a pre-tax rate of return of 11.57% if you are in the 30% tax bracket individual. An assured 11.57% assured pre-tax rate of return!! Where can you find a better investment tool?

So, before you go ahead and invest in another instrument, make sure that you have used PPF completely. It's April and the beginning of a new financial year, and an opportunity to earn tax-free 8%. What are you waiting for? Go ahead and invest the first 70,000 savings in PPF. Then invest the rest elsewhere.