PPF vs SIP Returns: PPF and SIP, both schemes are considered very good for long term investment. The only difference is that one scheme gives fixed returns and the other scheme is market based. This means that if you invest in PPF, you will get fixed interest from the government, whereas if you invest in SIP, you will get returns according to the market. You can deposit a maximum of 1.5 lakh rupees in PPF i.e. 12,500 rupees every month. Here know how much return you will get by investing 12,500 rupees every month in PPF and in SIP. Which scheme will make you a millionaire soon.
How much return in PPF in 15 years
Let’s talk about PPF first. This government scheme matures in 15 years, but if you want, you can extend it in blocks of 5 years each. If you invest Rs 12,500 every month in this, then in 15 years you will have invested Rs 22,50,000 and on maturity you will get Rs 40,68,209.
To become a millionaire, you will have to get an extension
To become a millionaire from PPF, you will have to get its extension done and that too twice in blocks of 5 years each. This means that you will have to continue this investment in PPF for 25 years. As per the monthly investment of Rs 12,500, you will have to invest a total of Rs 37,50,000 in 25 years and then on maturity you will get Rs 1,03,08,015. In this way, you will be able to become a millionaire in 25 years.
In how many years will you become a millionaire in SIP
If you invest Rs 12,500 per month i.e. Rs 1.5 lakh annually in SIP, then to become a millionaire you will have to invest continuously for 19 years. In 19 years, you will have a total investment of Rs 28,50,000. The average return of SIP is considered to be around 12 percent. In such a situation, if you calculate according to 12 percent return, then you will get Rs 72,73,782 as interest. In this way, you will get a total of Rs 1,01,23,782 in 19 years and become a millionaire.
If you continue investing in SIP for 25 years…
If you continue investing Rs 12,500 for the entire 25 years, then you will invest Rs 37,50,000 equal to PPF, but at the rate of 12 percent, you will earn Rs 1,75,27,582 as interest. In 25 years, you will get Rs 2,12,77,582.
Keep these things in mind
If you are going to invest in SIP, then keep in mind that due to market based returns, it can be less or more. Here the calculation has been done on the basis of estimation. On the other hand, if you choose PPF, then remember that to continue the extension with investment, you will have to give an application to the bank or post office, wherever you have an account, 1 year before the date of maturity. Your account will be extended for 5 years at one time. To extend it again, you will have to apply again.
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