SIP vs PPF Investment: SIP (Systematic Investment Plan) and PPF (Public Provident Fund) are two of the most preferred options for long term investment in mutual funds. Both are for different types of investors, with varying levels of risk and return potential.
SIP vs PPF Investment: Through SIP, investors get the facility to deposit a fixed amount regularly in a mutual fund. Investing in it gives the benefit of rupee averaging and the power of compound interest. However, returns are linked to the market. This is the reason why SIP is considered suitable for such investors who have the ability to take risks.
If you deposit Rs 10420 every month in SIP and you get an average return of 12% every year, then after 15 years you will have around Rs 49 lakh 59 thousand. Out of this, about Rs 30 lakh 83 thousand is just the profit on investment. But remember that the stock market is volatile. Therefore, if you want profit, you will have to invest money for a long time and be patient.
PPF is a government scheme in which your money is completely safe and you also get tax exemption. This is the best saving scheme for such people who want to keep their money safe and want to grow it slowly without any risk.
PPF gives a compound interest of 7.1% per annum. Investment is made in it for 15 years and the investment can be increased in blocks of 5 years each. You can invest from Rs 500 to Rs 1.5 lakh annually in it. The money received on its maturity is tax free under section 80C.
In this, if you invest Rs 1,25,000 annually for 15 years, then during this period you have invested a total of Rs 18,75,000. With a return of about Rs 15,15,174 on this investment, you will get Rs 33,90,174. PPF investment is risk free and tax free. But compared to equity based investment like SIP, it gives less return on money.
If you have to choose between SIP and PPF, then SIP has the possibility of higher returns. But its investment is subject to market risk. But investment in PPF gives guaranteed returns along with tax benefits. Investors who want stability can invest in it. To make good money, SIP can give good returns in the long term amid market fluctuations.
(Disclaimer: We do not recommend any kind of investment. Contact your financial advisor before making any kind of investment.)
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