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6 investment avenues you can look at post PPF rate cut

PPF will now offer 7.9%
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PPF will now offer 7.9%

The Public Provident Fund (PPF) will now offer 7.9% but experts say it is still a good option for investors as it offers assured returns. However if you are considering to withdraw your money from the PPF and invest it somewhere else, here are 6 alternate investment options:

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Bank fixed deposits
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Bank fixed deposits

Interest rate offered: 6.5-7.5%
Tax treatment: Interest is fully taxable
Our assessment: Not recommended, because both options will give lower post-tax returns than PPF.

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Sukanya Samriddhi Yojana
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Sukanya Samriddhi Yojana

Interest rate offered: 8.4% (For 2016-17)
Tax treatment: Tax free corpus
Our assessment: Suitable option for people with daughters aged below 10.

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Voluntary provident fund
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Voluntary provident fund

Interest rate offered: 8.65% (For 2016-17)
Tax treatment: Tax free corpus
Our assessment: Worth a try, but even EPF rate will dip when overall interest rates fall.

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Short-term debt funds
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Short-term debt funds

Interest rate offered: 8.83% (past one year)
Tax treatment: Gains taxed at 20% (after indexation benefit) after three years
Our assessment: Not recommended. Post-tax returns on short-term debt funds will not be able to match the assured returns offered by PPF.

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Arbitrage funds
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Arbitrage funds

Interest rate offered: 7.73% (past three years)
Tax treatment: Gains are tax free after one year
Our assessment: Despite returns being tax-free, arbitrage funds will not be able to match the assured returns offered by PPF.

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Monthly income plans (MIPs)
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Monthly income plans (MIPs)

Interest rate offered: 11.34% (past one year)
Tax treatment: Gains taxed at 20% (after indexation) if held for three years
Our assessment: Monthly income plans are the best option for beating inflation without taking too much risk. But returns are not assured.

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