SIP vs PPF: Where Will a Monthly ₹5,000 Investment Earn More Over 15 Years?

For long-term wealth creation, both PPF and Mutual Fund SIPs are among the most preferred investment avenues in India. While the Public Provident Fund promises fixed, government-backed returns, SIPs offer the potential for much higher gains—but with market-linked risks. This makes many investors wonder: if someone invests ₹5,000 every month, which option will ultimately generate more wealth over a 15-year horizon?

To answer that, it is essential to understand how both instruments work and how their returns differ over time.

Understanding PPF and Why It Remains Popular

The Public Provident Fund (PPF) is a government-supported savings scheme with a lock-in period of 15 years. It currently offers an annual interest rate of 7.1%, which is revised periodically. Because the returns are guaranteed and the entire maturity amount is tax-free, PPF continues to be a preferred choice for conservative investors.

Once the initial 15-year period ends, investors can extend the account for another five years in blocks. This makes PPF ideal for anyone seeking stable, predictable growth without exposure to market volatility.

PPF Example: ₹5,000 Monthly for 15 Years

• Total investment: ₹9 lakh

• Return rate: 7.1% fixed annually

• Estimated interest earned: ₹6.78 lakh

• Total maturity value: ₹15.78 lakh

• Tax on returns: Zero

• Risk level: Very low

• Lock-in: 15 years

These calculations show how PPF offers steady but moderate growth, suitable for risk-averse investors.

How SIP Works and Why It Can Deliver Higher Returns

A Systematic Investment Plan (SIP) allows investors to put a fixed amount into mutual funds every month. SIPs benefit from market growth, compounding, and rupee-cost averaging, making them powerful tools for long-term wealth creation.

Equity SIPs typically generate 10–12% annual returns over long periods. However, returns are not guaranteed because they depend on market performance. Unlike PPF, SIPs have no lock-in, except for ELSS funds which come with a three-year lock-in.

SIP Example: ₹5,000 Monthly for 15 Years (Assuming 12% Annual Returns)

• Total investment: ₹9 lakh

• Estimated return: ₹14.8 lakh

• Total maturity value: ₹23.8 lakh

• Taxation: Capital gains tax applicable

• Risk level: Moderate to high

• Lock-in: None (ELSS: 3 years)

Even after considering taxes, SIPs generally deliver significantly higher long-term growth compared to fixed-income products like PPF.

PPF vs SIP: A Quick Comparison

From this comparison, it is clear that SIPs outperform PPF by a significant margin over a long period, assuming the investor is comfortable with market fluctuations.

Which Option Should You Choose?

Both PPF and SIP are strong long-term investment tools, but they serve different investor profiles:

• Choose PPF if:

  • You prefer guaranteed returns

  • You want zero risk

  • You need tax-free maturity proceeds

  • You are comfortable with long lock-in periods

• Choose SIP if:

  • You want higher long-term wealth creation

  • You can tolerate market ups and downs

  • You have a long-term horizon of 10–15 years or more

  • You want flexibility without strict lock-ins

Ultimately, the right choice depends on your financial goals, risk appetite, and investment timeline. Many investors even choose a combination of both—using PPF for stability and SIPs for growth—creating a balanced long-term portfolio.