PPF AND VPF

Though the ultra-safe PPF has slipped to fourth place in the ranking this year, it still remains a good option for the conservative investor who doesn't mind earning less as long as the returns are assured. It's been almost four years since the PPF rate was linked to the benchmark bond yield. But bond yields have stayed buoyant in the past four years so the PPF rate has not fallen. However, the government has indicated that it will review the interest rates on small savings schemes, including the PPF and NSCs.

If this is a worry, opt for the Voluntary Provident Fund. It offers that same interest rate and tax benefits as the Employees' Provident Fund. Given the political implications of reducing the interest rate on the EPF, it is unlikely that the VPF rate will see a cut in the near future. What's more, there is no limit to how much you can invest in the VPF. The best part is that the contribution gets deducted from the salary itself so the investor does not even feel it go.