PPF vs SIP: Investing in a Public Provident Fund (PPF) guarantees a fixed interest rate set by the government, while a Systematic Investment Plan (SIP) offers returns that fluctuate based on market performance. The maximum amount you can contribute to a PPF is 1.5 lakh rupees, which translates to a monthly deposit of 12,500 rupees. Below, you will find an analysis of the potential returns from investing 12,500 rupees monthly in both PPF and SIP, along with insights on which option could help you achieve millionaire status more quickly.
PPF
This government-backed scheme has a maturity period of 15 years, with the option to extend it in five-year increments. By investing 12,500 rupees each month, your total investment over 15 years will amount to 22,50,000 rupees, yielding a maturity value of 40,68,209 rupees. To reach millionaire status through PPF, you would need to extend your investment for an additional 10 years, resulting in a total investment of 37,50,000 rupees over 25 years. At maturity, this would provide you with 1,03,08,015 rupees, allowing you to become a millionaire in 25 years.
SIP
If you allocate 12,500 rupees monthly to a SIP, or 1.5 lakh rupees annually, you will need to maintain this investment for 19 years to achieve millionaire status. Over this period, your total investment will be 28,50,000 rupees. Assuming an average return of approximately 12 percent, you can expect to earn around 72,73,782 rupees in interest. Consequently, your total amount after 19 years would be 1,01,23,782 rupees, enabling you to become a millionaire. But it is necessary to remember that Mutual Funds are subject to market risk.