SIP vs PPF: Systematic Investment Plans (SIPs) and Public Provident Funds (PPF) are two popular long-term investment options. PPF is a government-backed savings scheme, while SIP is a market-linked investment plan. In this write-up, we will explain, through calculations, which option can provide a higher return on an annual investment of Rs 50,000. But first, let’s briefly understand both investment options.
SIP
An SIP (Systematic Investment Plan) is an investment option in which investors can invest on a monthly, quarterly, or annual basis, depending on their financial capacity. The average long-term return on an SIP is around 12 per cent.
PPF
On the other hand, PPF is a government-backed savings scheme in which individuals can invest up to Rs 1.5 lakh per year. It offers an interest rate of 7.1 per cent per annum, and the maturity period is 15 years.
Can you guess how much corpus you will have after 15 years in both investments if you invest Rs 50,000 annually? Let’s find out.
SIP Investment Calculation: How much corpus will you generate in 15 years with Rs 50,000 annual investment?
If you invest Rs 50,000 per year ( Rs 4,166 per month), your total investment over 15 years will amount to Rs 7,49,880. Assuming an average annual return of 12 per cent, your corpus at the end of 15 years would be approximately Rs 21,02,064, including Rs 13,52,184 as capital gains.
PPF Investment Calculation: How much will corpus you generate in 15 years with Rs 50,000 annual investment?
If you invest Rs 50,000 per year in a PPF, your total investment over 15 years will also be Rs 7,50,000. However, with an annualised return of 7.1 per cent, the interest earned would amount to Rs 6,06,070. The final corpus would grow to around Rs 13,56,070 (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 | 7,50,000 (approx) | 13,52,184 | 21,02,064 |
| PPF | 7,50,000 | 6,06,070 | 13,56,070 |
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.
