Choosing between FD and PPF depends on the needs of the investor, thus when deciding between these two, one should properly weigh the pros and cons of both the instruments.
While PPF is cent percent secure option with the guarantee of Govt. of India, it does not offer liquidity for 6 years after which partial withdrawals are allowed annually from the 7th financial year.
When talking about FD, there is an insurance of Rs. 1 lakh on bank FDs. FD is comparatively more liquid an option when compared to PPF. Premature withdrawals, both part and full, can be availed (as per the bank’s or company’s policy).
Therefore, if the goal is to keep the money locked-in safely for a good number of years to be used at a later stage in life, PPF may prove beneficial. In case one wants low-risk investment with decent returns along with the option to prematurely close the account, FD is much better an option.