PPF vs SIP: Are you interested in investing a minimum of Rs 10,000 each month in a scheme that promises better returns over a 15-year period? Are you uncertain about whether a Public Provident Fund (PPF) or a Systematic Investment Plan (SIP) would yield higher returns? Let us explore the calculations to determine which option may offer greater benefits.
PPF or SIP, where should you invest and why, let’s explore the calculations
Investment preferences can differ significantly among individuals. Some investors prefer schemes that guarantee returns, while others are willing to accept market risks in pursuit of potentially higher gains. If you are considering investing in mutual fund SIPs and PPFs, it is essential to understand the distinctions between these two schemes.
Investment in PPF
If you contribute Rs 10,000 monthly to a PPF, your total investment will amount to Rs 1,20,000 in one year, culminating in Rs 18,00,000 over 15 years. With an interest rate of 7.1%, you will earn Rs 14,54,567 in interest after 15 years, resulting in a maturity amount of Rs 32,54,567.
SIP Calculation
This investment avenue carries market risks; however, experts suggest it can yield an average annual return of 12%. Numerous mutual fund schemes have historically provided returns exceeding this average. Assuming a 12% annual return on your investment, your total investment over 15 years will still be Rs 18,00,000. With an average annual return of 12%, you could earn Rs 32,45,760 solely in interest. When combined with your initial investment, the total amount you could receive would be Rs 50,45,760.
It is necessary to remember that Mutual Funds are subject to market risk.