Both the Public Provident Fund (PPF) and Systematic Investment Plan (SIP) are great investment options that can help you build a large corpus. While PPF is a safe investment platform, the returns in Mutual Fund SIP depend on the volatility of the stock market, so it is considered less safe.
Mutual Fund SIP has become quite popular among investors due to the possibility of better returns, which gives an average return of 12 to 14 percent. On the other hand, in PPF you get a return of 7.1 percent. Today we will know that if you invest in both schemes for 15 years, then you can get better returns or which scheme is better for you. So let’s compare and understand the nuances of investment.
Which will give more returns after 15 years of investment
In PPF, your money remains in a lock-in period for 15 years, which means that you cannot withdraw this money before 15 years. At the same time, investing in mutual fund SIP is beneficial only if you invest in it for a long period. If you invest in both for 15 years, you will get better returns in mutual fund SIP. However, this return also depends on the volatility of the market. We have compared these two based on an estimated return of 12 to 14 percent in mutual funds.
Suppose, you invest ₹ 65,000 in a year in both mutual fund SIP and PPF, then at a rate of 7.1 percent return, you will get around ₹ 17,62,891 in 15 years. Along with this, if the same money is invested in mutual fund SIP for 15 years, you can get a return of up to ₹ 27,32,784. This return has been calculated based on an estimated return of 12 to 14 percent in mutual funds.
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How does your money grow
An investment of ₹65,000 will become ₹9,75,000 in 15 years. At the same time, according to the 7.1 percent return of PPF, you will get ₹7,87,891 as interest on ₹9,75,000. In total, you will get ₹17,62,891.
On the other hand, in mutual funds, you will be given ₹17,57,784 as interest on about ₹9,75,000, which means that overall your fund will be ready for ₹27,32,784. This clearly shows that SIP has the potential to give better returns in the long term, although it also involves market risk.
Safety of PPF or strong return of SIP
PPF is an excellent option for investors who want security and guaranteed returns on their invested amount. There is no market risk in this and it is a government-backed scheme. On the other hand, SIP is more suitable for those investors who can take a little risk and want to grow their money rapidly in the long term. The return potential in SIP is much higher than PPF, but it depends on the market movement.
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