SIP vs PPF: Building wealth for post-retirement life is just as essential as meeting daily expenses. However, many people neglect to accumulate a corpus for their future, which can lead to financial dependence in retirement. If you don’t want to face this in your old age, you need to start investing as soon as possible. If you’re looking for good investment options, then you may consider Public Provident Funds (PPF) or Systematic Investment Plans (SIPs).
What is SIP Mutual Fund?
SIP is a market-linked investment plan.
Key Features of SIPs:
Fixed monthly contributions
Can invest monthly, quarterly, or annually based on your financial capacity
Average long-term return is around 12 per cent
What is PPF?
PPF is a government-backed savings scheme.
Key Features of PPF:
Can invest up to Rs 1.5 lakh per year
Maturity period is 15 years
Offers an interest rate of 7.1 per cent per annum
Can you guess how much corpus you will have after 15 years in both investments if you invest Rs 1,20,000 per year? Let’s find out.
SIP Investment Calculation: How much corpus will you generate in 15 years with Rs 1,20,000 annual investment?
If you invest Rs 1,20,000 per year (Rs 10,000 per month), your total investment over 15 years will amount to Rs 18,00,000. Assuming an average annual return of 12 per cent, your corpus at the end of 15 years would be approximately Rs 50,45,760, including Rs 32,45,760 as capital gains.
PPF Investment Calculation: How much will corpus you generate in 15 years with Rs 1,20,000 annual investment?
If you invest Rs 1,20,000 per year in a PPF, your total investment over 15 years will also be Rs 18,00,000. However, with an annualised return of 7.1 per cent, the interest earned would amount to Rs 14,54,567. The final corpus would grow to around Rs 32,54,567 (the sum of both the principal and the interest).
Investment Summary (Figures in Rupees)
Investment Type | Total Investment (15 years) | Capital Gain | Final Corpus |
SIP | 1,20,000 | 32,45,760 | 50,45,760 |
PPF | 1,20,000 | 14,54,567 | 32,54,567 |
SIP Investment Summary –
PPF Investment Summary –
Key Considerations:
– SIPs are market-linked, meaning returns are not guaranteed. The 12 per cent return mentioned above is an estimate, and actual returns may vary depending on market conditions.
– PPF offers guaranteed returns, but the interest rate is fixed and lower than that of SIPs.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)