PPF vs SIP Calculation: Where can an investment of ₹3,000 grow into a fund of up to ₹10 lakh? Here is the complete calculation..
Are you considering investing but unsure whether to choose an SIP or a PPF? If so, this information is for you. While an SIP (Systematic Investment Plan) carries market risk, a PPF (Public Provident Fund) is safe; however, there is a significant difference in the returns they offer. Let’s use calculations to understand which option will help you build a larger corpus for the future.
SIP vs. PPF:
PPF is a popular investment choice, but it generally does not yield returns comparable to an SIP. For instance, if you plan to invest ₹3,000 every month for 15 years, the comparison between a PPF and an SIP would look like this:
Feature | Mutual Fund SIP | PPF
Monthly Investment | ₹3,000 | ₹3,000 (₹36,000 annually)
Duration | 15 years | 15 years (lock-in period)
Interest Rate / Return | 12% p.a. (market-linked) | 7.10% p.a. (fixed and guaranteed)
Total Investment | ₹5.40 lakh | ₹5.40 lakh
Interest Earned | Approx. ₹9.73 lakh | ₹4.14 lakh
Total Corpus | Approx. ₹15.13 lakh | Approx. ₹9.54 lakh
Risk | Market risk involved | Completely safe (government-guaranteed)
Taxation | 12.5% LTCG tax on gains exceeding ₹1.25 lakh | Completely tax-free (exempt on investment, interest, and maturity)
Which one should you choose?
If you have the appetite for risk and aim to build a substantial corpus, an equity SIP may prove to be the better choice for you. On the other hand, if you prefer not to take any risks and are looking for safe, tax-free returns, then the PPF is the right choice for you. Alternatively, you can adopt a balanced approach by investing in both, tailored to your specific needs.
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
