Advantage of retirement fund vs provident fund?

Question

Advantage of retirement fund vs provident fund?

Accepted Answer · 2020-01-22

Retirement mutual funds are flexible in nature as they provide different investment schemes according to the risk appetite and investment horizon of the investor. While the provident fund is a central government saving plan which is established to encourage the long-term savings among the residents of India.
Provident fund has a lock-in period of 15 years while retirement mutual funds have a lock-in period of only 5 years. So, investors in need of money can exit from an investment after 5 years from retirement mutual fund schemes.
Mutual funds can offer you inflation-beating returns in the long run while PPF offers returns @ 8% approximately, which is not enough over a long period. These returns also change as per government policies, but mutual funds totally depend on its asset allocation.
PPF is mainly a fixed income investment while mutual funds invest in different asset classes and thus, increase returns and diversify risk.

All the above points show that retirement mutual funds are more beneficial for an investor compared to provident fund, as it offers higher returns in the long run and also has a shorter lock-in period.

Advantage of retirement fund vs provident fund?

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