The tenure of PPF is 15 years and is extendable in blocks of 5 years. While liquidity of PPF is lower than other tax saving fixed income investments, PPF does offer limited liquidity options through withdrawals and loans, during the term of the investment. Withdrawals not exceeding 50% of fourth year balance or 50% of the balance at the end of the immediate preceding year, whichever is lower, are permitted after a lock-in period of 7 years. PPF also offers loan facilities from third year onwards under special circumstances. The loans can be availed between third and sixth year, and should not exceed 25% of the balance second immediate preceding year. Rate of interest of the loan will be 2% more than prevailing PPF rate and the loan must be repaid in two years. The withdrawal and loan facilities notwithstanding, PPF is essentially a very long term investment. Investors must be prepared to wait for at least 15 years to get the maturity amount.
ELSS has a lock-in period of three years from the date of the investment. In other words, investors will not be able to redeem their units for the first three years. If you invest in an ELSS through a systematic investment plan (SIP), each SIP investment will be locked in for three years from their respective investment dates. You can opt for both growth and dividend options. But you should not opt for dividend re-investment option, because the every dividend re-invested gets locked in for 3 years in an ELSS. So a portion of your dividend gets locked-in for ever. If you have opted for dividend re-investment in an ELSS fund, you can switch to the dividend payout option. Some mutual funds also allow investors to switch from dividend re-investment to growth option.